Hercules Exercise Equipment Co. purchased a computerized measuring device two years ago for $86,000. The equipment falls into the five-year category for MACRS depreciation and can currently be sold for $38,800. A new piece of equipment will cost $215,000. 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. Cash Year Savings $65,000 55,000 53,000 51,000 48,000 37,000 5 6 The firm's tax rate is 25 percent and the cost of capital is 11 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.) Depreciation Base Percentage Depreciation Annual Year Depreciation 1 2 3 4 5 6 0 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.) Year Depreciation Base Percentage Depreciation Annual Depreciation 1 2 3 4 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.) Depreciation Depreciation on New Equipment Incremental Tax Shield Benefits Year on Old Tax Rate Depreciation Equipment 1 2 3 5 i. Compute the aftertax benefits of the cost savings. (Enter the aftertax factor as a decimal rounded to 2 decimal places. Round all other answers to the nearest whole dollar.) Aftertax Savings Year Savings (1 Tax Rate) 1 65,000 55,000 2 53,000 4 51,000 5 48,000 37,000 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.) Tax Shield Year Benefits from Aftertax Cost Total Annual Savings Benefits Depreciation 1 2 4 5 6 j-2. Compute the present value of the total annual benefits. (Do not round intermediate calculations and round your answer to the nearest whole dollar.) Present value k-1. Compare the present value of the incremental benefits () 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.) Net present value LC Co