Homework answers / question archive / I'm having difficulties to solve the last part of the problem What is the total cash flow associated with the replacing the equipment? Can you show me how to solve it, please? Windsor is considering the replacement of a piece of equipment with a newer model

I'm having difficulties to solve the last part of the problem What is the total cash flow associated with the replacing the equipment? Can you show me how to solve it, please? Windsor is considering the replacement of a piece of equipment with a newer model

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I'm having difficulties to solve the last part of the problem What is the total cash flow associated with the replacing the equipment? Can you show me how to solve it, please?
Windsor 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
$274500
$457500
Accumulated depreciation
109800
- 0 -
Annual operating costs
366000
292800
If the old equipment is replaced now, it can be sold for $73200. 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 $36600 refurbishing the old equipment. Additionally, Chung's the equipment manager has determined that the new equipment can be rented out during idle periods to generate $2196 per year. Using this new information, what is the total cash flow associated with replacing the equipment?