$12-35$

A corporation with a $27\%$ combined income tax rate is considering the following investment in research equipment.

Year Before$-$Tax Cash Flow

$0$$$7,500,000$

$1650,000$

$2950,000$

$32,750,000$

$41,900,000$

$5800,000$

$6450,000$

Prepare an after$-$tax cash flow table assuming MACRS depreciation.

$($a$)$What is the before$-$tax rate of return?

$($b$)$What is the after$-$tax rate of return?