Armando. Nc is considering replacing a piece of its manufacturing equipment. The new equipment has a cost of $$760,000$ plus installation costs of $$60,000.$ The old equipment currently has a market value of $$270,000.$ The estimated operating income for both pieces of equipment for the next five years is shown below. Southside Industries has a cost of capital of $13\mathrm{.}7\%$ and is in the $40\%$ tax bracket.

Year New equipment

Old equipment

$1$

$$60,000$

$$55,000$

$2$ $$68,000$

$$52,000$

$3$ $$72,000$

$$49,000$

$4$ $$72,000$

$$47,000$

$5$

$$80,000$

$$44,000$

What is the incremental cost of the new manufacturing equipment?