Question: help asap Hercules Exercise Equipment Co. purchased a computerized measuring device two years ago for $92.000. The equipment falis into the five-year category for MACRS

help asap  help asap Hercules Exercise Equipment Co. purchased a computerized measuring device
two years ago for $92.000. The equipment falis into the five-year category
for MACRS depreciation and can currently be sold for $41,800. A new
plece of epuipment will cost $245,000. It 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 Iable.12-12.

Hercules Exercise Equipment Co. purchased a computerized measuring device two years ago for $92.000. The equipment falis into the five-year category for MACRS depreciation and can currently be sold for $41,800. A new plece of epuipment will cost $245,000. It 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 Iable.12-12. Use Appendix B for an approximate answer but calculate your finat answer using the formula and financial calculator methods. The firm's tox rate is 25 perchat and the cost of cepital is 13 percent. a. What is the book value of the old equipment? (Do not round intermediate calculations and round your answer to the nearest whole doliar) 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 doliar.) 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 dollars d. What is the casti inflew from the sale of the old equipment? (Do not round intermediate calculations and round your answer to the nearest whole doline.) e. What is the net cost of the new equipment? (Include the inflow from the sale of the old equipment) (Do not round intermediate 1. Oetermine the depreciation schedule for the new equipment. (Round the depreciation base and annuat deprecintion answers to the nearest whole deliar. Round the percentage depreciation factors to 3 decimal places.) 9. Determine the depreciation schedule for the remaining years of the old equipment. (Round the depreciation base and annual depreciation answers to the nearest whole dollar. Round the percentage depreciation factors to 3 decimal places.) h. Determine the incremental deprecietion between the old and new equipment and the related tax shield benifits, (Enter the tax rate as a decimal rounded to 2 decimal places. Round all other answers to the nearest whole dollar.) L. Compute the aftertax benefits of the cost savings. (Enter the aftertax factor as a decimal rounded to 2 decimal places. Round all other answers to the nearest whole dollar.) 5-1. Add the deprecintion tax shield benectits and the aftertax cost savings to determine the total annual benefits, (Do not round intermediate calculations and round your answers to the nearest whole dollac] -2. Compute the present value of the total annual benefits. (Do not round intermediate calculations and round your answer to the nearest whole dollar.) k-1. Compare the present value of the incremental benefits (j) to the net cost of the new equipment (o) (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round your answer to the nearest whole dollac.) 1-2. Campute the present value of the total annual benefits. (Do not round intermediate calculations and round your answer to the nearest whole dollae.) h-1. Compare the present value of the incremental benefits (0 to the net cost of the new equipment fel (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Pound your answer to the nearest whole dollar.) k-2. Should the replacement be undertaken? Yes No

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