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? 

1. ($391680) 
2. ($403200) 
3. ($57600) 
4. ($430080
   
   

Answer rating: 100% (QA)

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