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 depreciation each year$)$

Useful life $=5$ years

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

Annual cash flows $=19250$

Proposed Machine

Cost $=$$$80,000$

Installation $=$$$10,000$

Depreciation using straight$-$line method depreciation each year$)$

Useful life $=5$ years

Annual cash flows $=42014$

Note: Insert numbers only. Answer not sensitive to decimal places.

Answer: