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Full excel in incremental cash flow analysis. Replacement decision analysis (L012-4) 33. Hercules Exercise Equipment Co. purchased a computerized measuring device two years ago for
Full excel in incremental cash flow analysis.
Replacement decision analysis (L012-4) 33. Hercules Exercise Equipment Co. purchased a computerized measuring device two years ago for $58,000. The equipment falls into the five-year category for MACRS depreciation and can currently be sold for $24,800. A new piece of equipment will cost $ 148,000. It also falls into the five-year category for MACRS depreciation. Assume the new equipment would provide the following stream of added cost savings for the next six years: Year 1 2 2 3 3 Cost Savings $62,000 54,000 52,000 50,000 47,000 36,000 4 5 The firm's tax rate is 35 percent and the cost of capital is 12 percentStep by Step Solution
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