can someone please help me w/ this CPA problem? im really stuck on it .

Supplementary CPA Examination Question Supplementary Question (continued) Effective is based on the following information MACRS Depreciation On Jan. 1, 20X1, XYZ Co. can replace old equipment Rates Tax Rates 25% 30% that is fully depreciated with new equipment as follows: Year 1 New Equipment Equipment 30% 40%. Year 2 $30,000 Cost $40,000 30% Year 3 20% Equipment remaining 30% Year 4. 15% 4 years life as of Jan. 1, 20X1 4 years There would be an immediate reduction in working Equipment salvage value in 4 years $8,000 $1,000 capital needs of $2,000 if the new equipment is Equipment salvage purchased $4,000 on Jan. 1, 20X1...... (question continued on next slide) New equipment annual operating cost savings. $12,000 Copyright 1013 R.R. Poteaa. CPA. (question continued slide) All rights reserved. Copyright 2013 R.R. Poteau, CPA All right Supplementary Question (continued) Present Value of $1 Present value of $1 Annuity Discounted End of Discounted at 16% at 16% 862 862 Year 1 1.605 743 Year 2 2.246 641 Year 3 2.798 552 Year 4. What is the net present value of purchasing the new equipment? Note: To answer this question, prepare an Excel spreadsheet similar to the one done during today's lecture. Copyright 2013 R.R. Poteau, cPA. All rights reserved