1. [8 POINTS] A company is considering the purchase of a $150,000 piece of equipment. The equipment is classified as 5-year MACRS property. The company expects to sell the equipment after three years at a price of $70,000. The relevant tax rate is 25%. What is the after-tax cash flow from this sale?

Year. Rate

1 20%

2 32%

3 19.20%

4 11.52%

5 11.52%

6 5.76%

2. You are planning to save for retirement over the next 35 years. To do this, you will invest $400 per month in a retirement account. The rate of return for the retirement account is expected to be 6 percent per year. After you retire, you expect that the account will have an annual return of 3 percent. How much can you withdraw each month from your account assuming a 25-year withdrawal period during retirement?