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Your firm just bought a new piece of equipment for $80,000. The shipping cost was $10,000....

Your firm just bought a new piece of equipment for $80,000. The shipping cost was $10,000. The machinery will generate $38,000 of additional revenue per year. It has an economic life of 4 years and falls into the MACRS 3-year class. At the end of 4 years, the equipment can be sold for $15,000 No additional working capital will be needed. The tax rate is 30%. The cost of capital is 8%.
A) what is the initial investment at time 0?
B) Compute the annual tax savings from depreciation (time 1 through 4)
C) Compute the annual after-tax revenue
D) Compute the after-tax salvage value
E) Compute the annual cash flows from time 0 to time F)Compute the project's NPV

macrs 3-year rates
1 year - 0.33
2 year - 0.45
3 year - 0.15
4 year - 0.07
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