TA, Inc. is considering replacing a piece of old equipment with a piece of new...
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TA, Inc. 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$140,000 Cash operating expenses $50o,ooo Annual depreciation Accounting salvage value$o Expected salvage value$240,000Expected salvage value$750,oo0 $1,500,0oo $2,500,000Acquisition cost 1o years $350,000Annual sales $6,200,0oo 10 years $850,000 Life $180,000Annual depreciation $620,000o Accounting salvage value $o . The new equipment will require an additional investment of $250,ooo in working capital. The tax rate is 35% TA's incremental annual after-tax operating cash flow resulting from the investment in the new equipment is closest to: A$%199,500 B$245,000 C$444,500
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