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Pinnacle Custom Home Builders purchased a 40 foot articulatingboom lift three years ago for $55,000. The equipment has beendepreciated under the 5-year MACRS schedule (20%, 32%, 19%, 12%,12% & 5%). The old equipment can be sold for $35,000.Pinnacle is considering the purchase of a new 60 footarticulating boom lift that would allow the company to completenearly all of its construction projects without the need for costlyrental lifts. The new lift could be purchased for $127,000 andwould also fall under the 5-year MACRS depreciation schedule.Assume the old and new equipment would provide the followingoperating gains (or losses) over the next six years.New EquipmentOld Equipment1.............$40,000$25,0002.............38,00016,0003.............35,0009,0004.............30,0008,0005.............25,0006,0006.............22,5005,000The firm has a 30 percent tax rate and a 7 percent cost ofcapital. Should the new equipment be purchased to replace the oldequipment? Briefly justify your answer.All interim calculations (including TVM) must be made using thebuilt-in Excel functions and your submission should be in good form(i.e., neat and easy to follow with descriptive labels, etc.).