12-28 A special power tool for plastic products costs $400,000 and has a four-year useful life, no salvage value, and a two-year pretax payback period. Assume uniform benefits and the end of year convention. Find the after tax rate of return. Use a MACRS THREE-YEAR depreciation schedule and a tax rate of 22.58%.

Tax @ Up Front Year Spending Annual Cash Flow MACRS Factor Taxable Income After Tax Cash Flow Depreciation 22.58% Payback