1. A company is evaluating the addition of equipment to its present operations. They need to purchase equipment for $160,000. The 5-year MACRS GDS recovery method (see table 7.3) is appropriate for the investment and the total tax rate is 40%. Gross revenue is expected to be $30,000/YEAR while maintenance cost is expected to be $5,000/YEAR. It is expected that operations will shut down by the end of the 4 year with a salvage value of $20,000 Part A: Draw a before tax cash flow diagram Part B: Use a table to show the development of the after-tax cash flow Part If the after-tax MARR is 12%, is the investment profitable? 1. A company is evaluating the addition of equipment to its present operations. They need to purchase equipment for $160,000. The 5-year MACRS GDS recovery method (see table 7.3) is appropriate for the investment and the total tax rate is 40%. Gross revenue is expected to be $30,000/YEAR while maintenance cost is expected to be $5,000/YEAR. It is expected that operations will shut down by the end of the 4 year with a salvage value of $20,000 Part A: Draw a before tax cash flow diagram Part B: Use a table to show the development of the after-tax cash flow Part If the after-tax MARR is 12%, is the investment profitable