A manufacturing company has some existing semiautomatic production equipment that it is considering replacing. This equipment has a present MV of ?$59,000 and a BV of ?$31,500. It has five more years of depreciation available under MACRS?(ADS) of ?$7,000 per year for four years and ?$3,500 in year five.?(The original recovery period was nine?years.) The estimated MV of the equipment five years from now is ?$18,000. The total annual operating and maintenance expenses are averaging $27,000 per year. New automated replacement equipment would then be leased. Estimated annual operating expenses for the new equipment are ?$13,100 per year. The annual leasing costs would be $24,300. The MARR?(after taxes) is 6?% per?year, t=50?%, and the analysis period is five years. ?(Remember?: The owner claims?depreciation, and the leasing cost is an operating?expense.)Based on an?after-tax analysis, should the new equipment be?leased? Base your answer on the IRR of the incremental cash flow.

A manufacturing company has some existing semiautomatic production equipment that it is considering replacing. This equipment has a present MV of $59,000 and a BV of $31,500. It has five more years of depreciation available under MACRS (ADS) of $7,000 per year for four years and $3,500 in year five. (The original recovery period was nine years.) The estimated MV of the equipment five years from now is $18,000. The total annual operating and maintenance expenses are averaging $27,000 per year. New automated replacement equipment would then be leased. Estimated annual operating expenses for the new equipment are $13, 100 per year. The annual leasing costs would be $24,300. The MARR (after taxes) is 6% per year, = 50%, and the analysis period is five years. (Remember. The owner claims depreciation, and the leasing cost is an operating expense.) Based on an after-tax analysis, should the new equipment be leased? Base your answer on the IRR of the incremental cash flow. The actual IRR of the incremental cash flow is |%. (Round to one decimal place.) The challenger should be leased rejected