. Net Returns and Discounted Rate of Return. The Echols Company is considering new word processing equipment that can reduce personnel costs by an estimated \(\$ 60,000\) a year. The new equipment is also expected to generate annual intangible customer service benefits of \(\$ 70,000\). The new equipment will cost \(\$+00,000\) and will be depreciated on a straight-line basis for tax purposes. The asset will have no residual value at the end of ten years, the estimated life of the equipment. Income tax is estimated at 40 percent.

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1. Determine the annual net cash inflow from the proposed investment.

2. Will the investment earn an 18 percent aftertax rate of return?

3. Comment on the NPV.