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please help. Hercules Exercise Equipment Co. purchased a computerized measuring device two years ago for $64,000. The equipment falis into the five-year category for MACRS
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Hercules Exercise Equipment Co. purchased a computerized measuring device two years ago for $64,000. The equipment falis into the five-year category for MACRS depreciation and can currently be sold for $27,800. A new piece of equipment will cost $154,000. It also falis 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 Anpendix B 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 8 percent. a. What is the book value of the old equipment? (Do not round intermediate calculations and round your answer to the nearest whole dollat.) b. What is the tax loss on the sale of the old equipment? (Do not round intermediate calculations and round your answer to the nearest whole dollar.) c. What is the tax benefit from the sale? (Do not round intermediate calculations and round your answer to the nearest whole dollar.) d. What is the cash inflow from the sale of the old equipment? (Do not round intermediate calculations and round your answer to the nearest whole dollar.) e. What is the net cost of the new equipment? (include the inflow from the sale of the old equipment) (Do not round intermediate caiculations and round your answer to the nearest whole dollar.) Step by Step Solution
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