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g. Determine the depreclation schedule for the remalning years of the old equipment. Note: Round the depreclation base and annual depreclation answers to the nearest
g. Determine the depreclation schedule for the remalning years of the old equipment. Note: Round the depreclation base and annual depreclation answers to the nearest whole dollar. Round the percentage depreclation factors to 3 decimal places. h. Determine the Incremental depreclation between the old and new equipment and the related tax shleld benefits. Note: Enter the tax rate as a decimal rounded to 2 decimal places. Round all other answers to the nearest whole dollar. I. Compute the aftertax benefits of the cost savings. Note: Enter the aftertax factor as a decimal rounded to 2 decimal places. Round all other answers to the nearest whole dollar. Hercules Exercise Equipment Company purchased a computerized measuring device two years ago for $52,000. The equipment falls into the five-year category for MACRS depreciation and can currently be sold for $21,800. A new piece of equipment will cost $142,000. 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. Use Table 12-12. Use for an approximate answer but calculate your final answer using the formula and financial calculator methods. The firm's tax rate is 25 percent and the cost of capital is 9 percent. a. What is the book value of the old equipment? Note: Do not round intermediate calculations and round your answer to the nearest whole dollar. b. What is the tax loss on the sale of the old equipment? Note: Do not round intermediate calculations and round your answer to the nearest whole dollar. c. What is the tax benefit from the sale? Note: Do not round intermediate calculations and round your answer to the nearest whole dollar. J-1. Add the depreclation tax shield benefits and the aftertax cost savings to determine the total annual benefits. Note: Do not round Intermedlate calculatlons and round your answers to the nearest whole dollar. J.2. Compute the present value of the total annual benefits. Note: Do not round Intermedlate calculations and round your answer to the nearest whole dollar. k-1. Compare the present value of the Incremental benefits (J) to the net cost of the new equipment (e). Note: Do not round Intermedlate calculatlons. Negatlve amount should be Indlcated by a minus sign. Round your answer to the nearest whole dollar. k-2. Should the replacement be undertaken? Yes No
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