Hercules Exercise Equipment Co. 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 1212. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Year		Cash Savings
1		$	59,000
2			51,000
3			49,000
4			47,000
5			44,000
6			33,000

The firms tax rate is 25 percent and the cost of capital is 9 percent.

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.) > Answer is complete but not entirely correct. Year Depreciation Base Percentage Depreciation Annual Depreciation 1 $ 142,000 20.000 $ 28,400 2 113,600 X 32.000 x 45,440 3 68,160 X 19.200 x 27,264 4 40,896 X 11.520 X 16,358 X 5 24,538 x 11.520 x 16,358 X 6 8,179 X 5.760 X $ 8,179 X 141,999 g. Determine the depreciation schedule for the remaining years of the old equipment. (Round the depreciation base and annual depreciation answers to the nearest whole dollar. Round the percentage depreciation factors to 3 decimal places.) > Answer is complete but not entirely correct. Year Depreciation Base Percentage Depreciation Annual Depreciation 1 $ 24,960 x 19.200 $ 9,984 2 14,976 x 11.520 X 5,990 x 3 11.520 x 8,986 x 2,995 x 5,990 x 2,995 X 4 5.760 j-1. Add the depreciation tax shield benefits and the aftertax cost savings to determine the total annual benefits. (Do not round intermediate calculations and round your answers to the nearest whole dollar.) Answer is complete but not entirely correct. Tax Shield Benefits Total Annual Year Aftertax Cost Savings from Depreciation Benefits 1 44,250X 4,604 $ 48,854 2 38,250x 9,862 X 48,112 3 36,750 X 5,318 X 42,068 4 35,250 x 3,341 x 38,591 5 33,000 X 4,090 X 37,090 6 24,750 X 2,045 X 26,795 h. Determine the incremental depreciation between the old and new equipment and the related tax shield benefits. (Enter the tax rate as a decimal rounded to 2 decimal places. Round all other answers to the nearest whole dollar.) Answer is complete but not entirely correct. Assessment Tool iFrame apreciation Year Incremental Depreciation on New Equipment Tax Rate Tax Shield Benefits on Old Equipment 9,984 $ $ 5,990 X 1 4,604 $ 28,400 $ 45,440 27,264 18,416 39,450 0.25 0.25 2 9,862 3 5,990 X 21,274 5,318 4 16,358 x 2,995 X 13,363 0.25 0.25 0.25 3,341 X 5 16,358 x 16,358 X 4,090 X 0 0 6 8,179 x 8,179 0.25 2,045 x k-1. Compare the present value of the incremental benefits (j) to the net cost of the new equipment (e). (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round your answer to the nearest whole dollar.) > Answer is complete but not entirely correct. Net present value $ 64,511 X $