An asset in the five-year MACRS property class costs $150,000 and has a zero estimated salvage value

Question:

An asset in the five-year MACRS property class costs $150,000 and has a zero estimated after six years of use. The asset will generate annual revenues of $320,000 and will require $80,000 in annual labor and $50,000 in annual material expenses. There are no other revenues and expenses. Assume a tax rate of 40%.
(a) Compute the after-tax cash flows over the project life.
(b) Compute the NPW at = 12%. Is the investment acceptable? 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... MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...