The Keeve Company is considering to replace its old machine with a book value of P75,000 andstill have a remaining useful life of 5 years. The old machine will be replaced with a new one that willcost P250,000, will have 5 year useful life and no salvage value.The annual operating costs of the old machine amount to P90,000 which can be reduced by 60% ifa new machine is acquired. The old machine would require reconditioning that will cost P10,000 if notreplaced which will be incurred before it starts operation. The old machine will have zero disposalvalue after 5 years, but can be disposed now at P20,000.REQUIRED:Ignoring the time value of money and income taxes, determine the relevant and differential costs.Should the machine be retained or replaced