Only three years after purchasing a machine, Greerwich Engineering has been given details of a new and improved model. This new model will increase output and help reduce costs. The existing machine cost $150,000$ and was being depreciated straight$-$line over an eight$-$year period. Current estimated scrap value for the existing machine is only $20,000.$ The estimated scrap value for the existing machine in $5$ years is $14,900.$ Details of new mashine

Costs of new machine $180,000.$

Expected life of the machine is $5$ years.

At the end of $5$ years the estimated scrap value is $815,000.$

There will also be an additional cost of $5,000$ to send workers on a training course for the new machine. The training will be required before the machine is delvered.

Additional annual fiwed costs of $15,000$ will be incurred If the new machike is purchased. This cost is included in the foed overhead cost per unit given below. Finally the management accountant has estimated that addrional working capital of $$80,000$ will be required if the new machine is purchased.

A comparison of the existing and new model is given below:

$\backslash$table$[[,$Existing Machine,New Machine$],[$Capacity $($units$),150,000,160\mathrm{.}000],[,2,2$