Net Present Value: Tax Effect. D.R. Williams Sales Company would like to hire another salesperson in order to expand sales. Estimates show that the addition of one person could result in increased sales of $80,000 per year. for three years on which the firm averages a 40 percent contribution margin. The salesperson would be paid $20,000 per year plus an 8 percent commission (which is included in variable costs). Hiring a new salesperson means the firm would need to buy a new car for $25,000; it would be depreciated in each of three years and then sold for $10,000. The car would be depreciated using the MACRS five-year recovery period. The tax rate is 40 percent. D.R. always has required that any investment result in a rate of return of at least 16 percent. Use the net present value method to determine if another salesperson should be hired.