Alpha Beta Company, Inc., a manufacturer of toys, is considering replacing an existing piece of equipment with a more sophisticated machine. The firm pays $40$ percent taxes on ordinary income and capital gains. Given the following information, calculate the incremental annual earnings before depreciation and taxes.

Existing Machine

Cost $=$ $$50,000$

Purchased $2$ years ago

Depreciation using straight$-$line method $(20\%$ depreciation each year$)$

Useful life $=5$ years

Current market value $=$ $$30,000$

Annual cash flows $=10474$

Proposed Machine

Cost $=$ $$80,000$

Installation $=$ $$10,000$

Depreciation using straight$-$line method $(20\%$ depreciation each year$)$

Useful life $=5$ years

Annual cash flows $=46221$