3. [24 points] A company is considering the replacement of some existing production equipment. . The new (replacement) equipment would cost $500,000 to initially purchase and have a useful life of 15 years with no salvage value. The existing equipment was purchased 8 years ago at a cost of $350,000 and has 7 years of useful life remaining Because it contains hazardous chemicals, it would cost $50,000 to dispose of the existing equipment at the end of its useful life. However, if replaced now, the existing equipment will be sold (now) to another company for $150,000. The existing equipment produces a net benefit of $80,000 per year while the new equipment would produce a net benefit of $125,000 per year. Given an interest rate of 10%, use an annual cash flow analysis to determine whether the existing equipment should be replaced or not