Tesla management are trying to decide whether to keep an older piece of machinery or buy a replacement. Management was presented with the following information to assist in their decision: A machine purchased three years ago for $314,000 has a current book value using straight-line depreciation of $187,000; its operating expenses are $38,000 per year. A replacement machine would cost $237,000, have a useful life of ten years, and would require $9,000 per year in operating expenses. It has an expected salvage value of $74,000 after ten years. The current disposal value of the old machine is $83,000; if it is kept ten more years, its residual value would be $14,000. Required Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced? Keep Old Machine Purchase New Machine Yes Total costs Should the old machine be replaced?