Hercules Exercise Equipment Company purchased a computerized measuring device two years ago for $$60,000.$ The equipment falls into the five$-$year category for MACRS depreciation and can currently be sold for $$25,800.$ A new piece of equipment will cost $$150,000.$ It also falls into the five$-$year category for MACRS depreciation. Assume the new equipment would provide the following stream of added cost savings for the next six years. Use$$Table $1212.$ Use$$Appendix B$$for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Year Cash Savings

$1$ $ $63,000$

$255,000$

$353,000$

$451,000$

$548,000$

$637,000$

The firm$$s tax rate is $25$ percent and the cost of capital is $13$ percent.

h$.$Determine the incremental depreciation between the old and new equipment and the related tax shield 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.

j$-1.$Add the depreciation tax shield benefits and the aftertax cost savings to determine the total annual benefits.

Note: Do not round intermediate calculations and round your answers to the nearest whole dollar.

j$-2.$Compute the present value of the total annual benefits.

Note: Do not round intermediate 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 intermediate calculations. Negative amount should be indicated by a minus sign. Round your answer to the nearest whole dollar.

k$-2.$Should the replacement be undertaken?

multiple choice

$*$Yes$$

$*$No