the five-year category for MACRS depreciation and can currently be sold for $21,800. A new plece of equipment will cost $142,000. It Hercules Exercise Equipment Co. purchased a computerized measuring device two years ago for $52.000. The equipment falls into 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 Areendix. for an approximate answer but calculate your final answer using the formula and financial Calculator methods. Year 1 Cash Savings $ 59,800 51,eee 49,800 47, Bee 44.ee 33,800 5 6 The firm's tax rate is 25 percent and the cost of capital is 9 percent a. What is the book value of the old equipment? (Do not round Intermediate calculations and round your answer to the nearest whole doller) Answer is complete and correct. Book value $ 24 960 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.) Answer is complete and correct. 3.160 Tex loss 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.) Year 1 2 Answer is complete and correct. Tax Shield Benefits Alberta Total Annual from Cost Savings Benefits Depreciation 4604 442505 48,854 9,865 38.250 48.115 5,321 36 750 42.071 3,320 35.250 38.579 4,083 33.000 37 083 2,059 24.750 26,809 3 3 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.) Answer is complete but not entirely correct. Present value is 187.154 K-1. Compare the present value of the incremental benefits to the net cost of the new equipment (el. (Do not round Intermediate calculations. Negative amount should be indicated by a minus sign. Round your answer to the nearest whole doller.) Answer is complete but not entirely correct. Net present 5 value 67.744 K-2. Should the replacement be undertaken? Yes No