Problem
A machine purchased three years ago for $305,000 has a current book value using straight-line depreciation of $178,000, its operating expenses are $35,000 per year. A replacement machine would cost $233,000, have a useful life of ten years, and would require $10,000 per year in operating expenses. It has an expected salvage value of $75,000 after ten years. The current disposal value of the old machine is $85,000; if it is kept 10 more years, its residual value would be $13,000.
Task
Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced?