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Company is trying to decide whether to continue using old equipment to make Product A or replace it with new equipment that will have lower

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Company is trying to decide whether to continue using old equipment to make Product A or replace it with new equipment that will have lower operating osts. The following information is available: The new equipment will cost $45,000. Disposal value at the end of its 5-year useful life will be $7,000. The old equipment was purchased 3 years ago for $23,000. It can be sold immediately for $5,000 but will have zero disposal value in 5 years. Maintenance work, costing $3,500, will be necessary on the new equipment in Year 4. The new equipment will result in $10,000 of operating cost savings each year. Assuming a discount rate of 8%, what is the net present value of replacing the old equipment with the new equipment? [Note: Use the Present Value tables in the Coursepack.)

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