The Pratt Company has a tax rate of $35\%$ and a required rate of return of $12\%.$ The company has new equipment that saves $$200,000$ per year in labor costs.

What is the total tax expense

If the new equipment showed a rate of return of $11\mathrm{.}5\%,$ should Pratt purchase the equipment?

What is the annual after$-$tax cash flow from the labor cost savings? $