9. 13.21 Two years ago, on the recommendation of its construction engineers, United Homebuilders purchased dumpsters, a front-end loader, and truck to carry off construction debris, rather than subcontracting the service. Information is listed for the project with depreciation determined using 5-year MACRS.

Table Summary: Table divided into four columns shows depreciation value of a project based on the time period and purchasing cost. The column headers are marked from left to right as: year; 0; 1; and 2. Year 0 1 2 First cost, $ −350,000 Savings, $ 150,000 150,000 Expenses, $ −25,000 −25,000 Depreciation, $ 70,000 112,000 1. The United Homebuilders president does not want to continue ownership, as he prefers subcontracting such services. What must the realizable market value of the currently-owned equipment be to equal the current book value? 2. If savings are considered the equivalent of gross income, determine the CFBT series and rate of return over the 2-year period. Assume the market value from

(a) is paid by an exporter of used heavy equipment. 3. Determine CFAT and after-tax ROR for the 2 years of ownership. Use the information from previous parts. Let Te = 25%. (Hint: At this point, do not consider the realized market value when TI and taxes are determined. See problem 13.32 for further analysis.)