7 Exercise 6-18A (Static) Asset replacement decision LO 6-5 32 nts A machine purchased three years ago for $720,000 has a current book value using straight-line depreciation of $400,000; its operating expenses are $60,000 per year. A replacement machine would cost $480,000, have a useful life of nine years, and would require $26,000 per year in operating expenses. It has an expected salvage value of $130,000 after nine years. The current disposal value of the old machine is $170,000; if it is kept 9 more years, its residual value would be $20,000. Required Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced? > Answer is complete but not entirely correct. Keep Old Machine Total costs $ Should the old machine be replaced? Purchase New Machine 520,000 $ 584,000 Yes