56. A manufacturing company decides to purchase a computer for $800,000. The equipment qualifi es as 5-year equipment for MACRS-GDS depreciation. The constant-dollar before-tax cash fl ows can be represented by a $25,000 increasing gradient series; the BTCF the fi rst year is $125,000; and a $100,000 salvage value occurs at the end of the 7-year planning horizon. A 40% tax rate applies. Infl ation is 5%/yr. The real ATMARR is 10%.

a. Determine the after-tax cash fl ows, in constant dollars, for each year.

b. Determine the present worth for the investment.

c. Determine the real internal rate of return for the investment.