Marin is considering the replacement of a piece of equipment with a newer model. The following data
Question:
Marin is considering the replacement of a piece of equipment with a newer model. The following data has been collected: Old Equipment New Equipment Purchase price $288000 $480000 Accumulated depreciation 115200 - 0 - Annual operating costs 384000 307200 If the old equipment is replaced now, it can be sold for $76800. Both the old equipment’s remaining useful life and the new equipment’s useful life is 5 years. For this question only, assume that six months ago Chung’s equipment manager spent $38400 refurbishing the old equipment. Additionally, the equipment manager has determined that the new equipment can be rented out during idle periods to generate $2304 per year. Using this new information, what is the total cash flow associated with replacing the equipment?
- ($391680)
- ($403200)
- ($57600)
- ($430080