Columbia Enterprises is studying the replacement of some equipment that original

Columbia Enterprises is studying the replacement of some equipment that originally cost $74000. The equipment is expected to provide six more years of service if $8700 of major repairs are performed in two years. Annual cash operating costs total $27200. Columbia can sell the equipment now for $36000; the estimated residual value in sixyears is $5000.New equipment is available that will reduce annual cash operating costs to $21000. The equipment costs $103000 has a service life of six years and has an estimated residual value of $13000. Company sales will total $430000 per year with either the existing or the new equipment. Columbia has a minimum desired return of 12% and depreciates all equipment by the straight-line method.Instructions:a. By using the net-present-value method determine whether Columbia should keep its present equipment or acquire the new equipment. Round all calculations to the nearest dollar and ignore income taxes.