Hercules Exercise Equipment Co. purchased a computerized measuring device two years ago for $84,000. The equipment falls into the five-year category for MACRS depreciation and can currently be sold for $37,800. A new piece of equipment will cost $205,000. 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 Table 12-12. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

\fDepreciation Depreciation Year on New on Old Incremental Tax Shield Equipment Equipment Depreciation Tax Rate BenefitsYear Savings (1 - Tax Rate) Aftertax Savings 64,000 54,000 52,000 50,000 47,000 36,000