A construction company decides to purchase a crane for $250,000. The crane qualifies as 5-year equipment for MACRS-GDS depreciation. The BTCF profile for the acquisition, expressed in constant dollars, consists of an annual uniform series of $50,000, plus a $50,000 salvage value at the end of the 7-year planning horizon. A 40% tax rate applies. Inflation is 4%/yr. The real ATMARR is 8%.

a) Determine the after-tax cash flows, in constant dollars, for each year.

b) Determine the present worth for the investment.

c) Determine the real internal rate of return for the investment.