A special power tool for plastic products costs $400,000 has a 4 year useful life, no salvage

Question:

A special power tool for plastic products costs $400,000 has a 4 year useful life, no salvage value, and a 2-year before tax payback period. Assume uniform annual end of year benefits. Compute the after tax rate of return, based on MACRS depreciation and a 34% combined corporate income tax rate.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...