64. (NPV; taxes) The manager of Crain Street Cold Storage is considering the installation of a new refrigerated storage room. She has learned that the installation would require an initial cash outlay of $780,000. The installation would have an expected life of 20 years with no salvage value. The installation would increase annual labor and maintenance costs by $75,000. The firm’s cost of capital is estimated to be 11 percent, and its tax rate is 30 percent. The storage room is expected to generate net annual cash revenues (before tax, labor, and maintenance costs) of $172,000.

a. Using straight-line depreciation, calculate the after-tax net present value of the storage room.

b. Based on your answer to part (a), is this investment financially acceptable?

Explain.

c. What is the minimum amount by which net annual cash revenues must increase to make this an acceptable investment?