Re-equipment Problems (A) Equipment Replacement The Parsons Company is considering the purchase of new equipment to perform operations currently being performed on different, less efficient equipment. The purchase price is $10,000,000, delivered and installed. A Parsons production engineer estimates that the new equipment will produce savings of $2,000,000 in labor and other direct costs annually, as compared with the present equipment. He estimated the proposed equipment's economic life at 12 years, with zero salvage value. The present equipment is in good working order and will last, physically, for at least 20 more years. The company requires a return of at least 20 percent before taxes on an investment of this type. Taxes are to be disregarded