A Canadian food processing company uses an after-tax MARR of 10%, and has a tax rate of 42%.

The company buys a new packaging machine for $20,000 which falls into an asset class with a CCA of

25%. The new machine provides annual benefits estimated to be $3,000 per year. Operating costs are

estimated to be $1,500 per year. The machine will be used for 5-years and then sold for $5,000.

a) Find the after-tax annual-worth of the machine. Was it a good investment? (8-marks)

b) For comparison, what would the company use as a 'before-tax' MARR?