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Your company is considering replacing a piece of old equipment with a piece of new equipment. Details for both are given below: New Equipment Old

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Your company is considering replacing a piece of old equipment with a piece of new equipment. Details for both are given below: New Equipment Old Equipment Current book value Current market value Remaining life Annual sales Cash operating expenses Annual depreciation Accounting salvage value Expected salvage value after 10 years $1,500,000 $2,500,000Acquisition cost 10 years Life S350,000 Annual sales $140,000 Cash operating expenses $150,000 Annual depreciation S0 $6,200,000 10 years $850,000 $500,000 $620,000 S0 Accounting salvage value Expected salvage value after 10 years $240,000 $750,000 - The new equipment will require an additional investment of $250,000 in working capital -The tax rate is 35%. Your company's terminal year incremental after-tax non-operating cash flow is closest to: A) $245,000 B) $331,500 C) $581,500 D) $737,500 E) $941,500

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