A new machine costs $200,000 and is expected to reduce net annual operating costs by $40,000 per year for 10 years. It will have an MV of $40,000 at the end of the tenth year.
a. Find ATCFs and BTCFs with recovery period of 5 years.
b. Calculate before-tax and after-tax IRR.
c. Calculate present worth of the cash flow after tax (MARR = 10% per year).
Assume effective income tax rate is 40%.