Raytheon wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for \($1.4\) million, \($600,000\) of which is borrowed at 11 percent for 5 years, and will have a salvage value of \($200,000\) after 8 years. Its use will create an opportunity to increase sales by \($650,000\) per year and will have operating expenses of \($250,000\) per year.

Corporate income taxes are 40 percent. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR if the chamber is kept for 8 years. After-tax MARR is 10 percent. Determine for each year the ATCF and the PW, FW, AW, IRR, and ERR for the investment if

a. straight-line depreciation is used over 8 years with no half-year convention and the loan is paid back using Method 1 (interest only at the end of each year of the loan, plus principal at the end of the last year).

b. straight-line depreciation is used over 8 years with no half-year convention and the loan is paid back using Method 2 (equal annual principal payments plus interest on the unpaid loan balance).

c. straight-line depreciation is used over 8 years with no half-year convention and the loan is paid back using Method 3 (equal annual principal plus interest payments during each year of the loan).

d. MACRS-GDS depreciation is used with the appropriate property class and the loan is paid back using Method 1 (interest only at the end of each year of the loan, plus principal at the end of the last year).

e. MACRS-GDS depreciation is used with the appropriate property class and the loan is paid back using Method 2

(equal annual principal payments plus interest on the unpaid loan balance).

f. MACRS-GDS depreciation is used with the appropriate property class and the loan is paid back using Method 3

(equal annual principal plus interest payments during each year of the loan).