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Tesla management are trying to decide whether to keep an older piece of machinery or...

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Accounting

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:
The old machine was purchased three years ago for $315,000 and has a current book value using straight-line depreciation of $188,000.
The old machine incurs operating expenses of $39,000 per year.
The current disposal value of the old machine is $73,000; if it is kept ten more years, its remaining value would be $19,000.
The replacement machine would cost $236,000 and have a useful life of ten years.
The replacement machine has an expected salvage value of $60,000 after ten years.
The replacement machine would require $13,000 per year in operating expenses.
Required
Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced?

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