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Need help with calculation of last 2 steps for this problem. Screen shots are below and thank you in advance. Hercules Exercise Equipment Company purchased
Need help with calculation of last 2 steps for this problem. Screen shots are below and thank you in advance.
Hercules Exercise Equipment Company purchased a computerized measuring device two years ago for $92,000. The equipment falls into the five-year category for MACRS depreciation and can currently be sold for $41,800. A new piece of equipment will cost $245,000. 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 13 percent. a. What is the book value of the old equipment? Note: Do not round Intermedlate coleulatlons 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 Intermedlate coleulatlons and round your answer to the nearest whole dollar. c. What is the tax benefit from the sale? Note: Do not round Intermedlate coleulatlons and round your answer to the nearest whole dollar. d. What is the cash inflow from the sale of the old equipment? Note: Do not round Intermedlate coleulations and round your answer to the nearest whole dollar. J-2. Compute the present value of the total annual benefits. Note: Do not round Intermedlate colculatlons and round your answer to the nearest whole doller. 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 colculatlons. Negotlve amount should be Indleated by a minus sign. Round your answer to the neorest whole dollar. k2. Should the replacement be undertaken? Yes No h. Determine the incremental depreciation between the old and new equipment and the related tax shield benefits. Note: Enter the tax rote as a decimal rounded to 2 declmal pleces. Round all other onswers to the nearest whole dollar. I. Compute the aftertax benefits of the cost savings. Note: Enter the aftertox foctor as a decimal rounded to 2 declmal places. Round all other answers to the neorest whole doller. J-1. Add the depreciation tax shield benefits and the aftertax cost savings to determine the total annual benefits. Note: Do not round Intermedlate colculatlons and round your answers to the neorest whole dollar. e. What is the net cost of the new equipment? (Include the inflow from the sale of the old equipment.) Note: Do not round Intermedlate colculations and round your answer to the nearest whole dollar. f. Determine the depreciation schedule for the new equipment. Note: Round the depreclation bese and annual depreclatlon answers to the nearest whole dollor. Round the percentage depreclatlon factors to 3 decimal ploces. g. Determine the depreciation schedule for the remaining years of the old equipment. Note: Round the depreclation bese and annual depreclation answers to the nearest whole dollor. Round the percentage deprecletlon factors to 3 declmol ploces
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