The Woodruff Corporation purchased a piece of equipment three years ago for $230,000. It has an asset depreciation range (ADR) midpoint of eight years. The old equipment can be sold for $85,500. A new piece of equipment can be purchased for $322,000. It also has an ADR of eight years. Assume the old and new equipment would provide the following operating gains (or losses) over the next six years:

Year	New Equipment	Old Equipment
1...............	$78,750	$23,000
2...............	77,500	15,500
3...............	71,250	8,500
4...............	58,500	6,250
5...............	48,750	6,500
6...............	45,000	-6,000

The firm has a 25 percent tax rate and a 9 percent cost of capital.

1. What is the net cost of the new equipment?

2.What is the present value of incremental benefits?

What is the NPV of this replacement decision?