Question: Three years back, a machine was purchased at a cost of Rs 3,00,000 to be useful for 10 years Its salvage value at the end

Three years back, a machine was purchased at a cost of Rs 3,00,000 to be useful for 10 years Its salvage value at the end of its estimated life is Rs 50,000 Its annual maintenance cost is Rs 40,000. The market value of the present machine is Rs 2,00,000.

A new machine to cater to the need of the present machine is available at Rs 2,50,000 to be useful for 7 years Its annual maintenance cost is Rs 14,000. The salvage value of the new machine is Rs 20,000.

Using an interest rate of 15, find whether it is worth replacing the present machine with the new one.

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