Problem #2: Estimating Cash Flows (14 points) A firm is considering an investment to replace old equipment with a new model. The firm has made the following estimates relative to the initial investment in the new model: . The purchase price of the new model is $200,000 plus $12,500 in delivery costs. It will cost $22,800 to install and prepare the new model for use. The new model will increase activity resulting in increases in components of net operating working capital: accounts receivable $22,000, inventory $15,000, and accounts payable $11,000. The old equipment unexpectedly became obsolete before it was completely depreciated for tax purposes and has a remaining tax book value of $12,600. A used equipment dealer has offered to purchase the old equipment for $15,000.