P12.3 Rodekohr Manufacturing Co. is considering replacing equipment currently used in the production process. Rodekohr can purchase new equipment for $133,000 and sell the old equipment for $50,000. Book value on the old equipment is $35,000. Rodekohr will calculate depreciation expense on the new equipment uniformly over its seven-year life. The new equipment is expected to generate annual cash savings of $18,200. Rodekohr has a 14 percent cost of capital and a 30 percent tax rate. Required: A. Calculate the net present value of the new machine. B. Should Rodekohr purchase the new equipment? Explain your answer. P12.5 Rudy Industries, Inc. wants to replace equipment that has a book value of zero and a market value of $8,900. The new equipment can be purchased for $35,000 and has an estimated useful life of four years. Rudy estimates the new equipment will generate annual cash inflows of $11,500 over the next four years. The equipment will require an additional investment of $5,000 in working capital. The working capital would be recovered at the end of the equipment's life. Depreciation on the new equipment would be calculated uniformly over its useful life. Rudy Industries, Inc. cost of capital is 11 percent and its tax rate is 30 percent. Required: A. Calculate the net present value of the new equipment. B. Should Rudy Industries, Inc. purchase the equipment. Explain your