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Hercules Exercise Equipment Co, purchased a computerized measuring device two years ago for $74,000. The equipment falls into the five-year category for MACRS depreciation and

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Hercules Exercise Equipment Co, purchased a computerized measuring device two years ago for $74,000. The equipment falls into the five-year category for MACRS depreciation and can currently be sold for $32,800. A new plece of equipment will cost $210.000. 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 Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year 1 2 3 4 5 6 Canh Savings $70,000 62,000 60.000 58,000 55,000 44,000 The firm's tax rate is 25 percent and the cost of capital is 13 percent a. What is the book value of the old equipment? (Do not round intermediate calculations and round your answer to the nearest whole doliar.) Book value b. What is the tax loss on the sale of the old equipment? (Do not round Intermediate calculations and round your answer to the nearest whole dollar) Tax loss c. What is the tax benefit from the sale? (Do not round intermediate calculations and round your answer to the nearest whole dollar.) Tax benefit d. What is the cash inflow from the sale of the old equipment? (Do not round intermediate calculations and round your answer to the nearest whole dollar) Cash inflow e. What is the net cost of the new equipment? (Include the inflow from the sale of the old equipment) (Do not round intermediate calculations and round your answer to the nearest whole dollar.) Net cost f. Determine the depreciation schedule for the new equipment. (Round the depreciation base and annual depreciation answers to the nearest whole dollar. Round the percentage depreciation factors to 3 decimal places.) Year Depreciation Base Percentage Depreciation Annual Depreciation 1 2 3 4 5 6 $ 0

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