A corporation with a 27% combined income tax rate is considering the following investment in research equipment.

Year Before-Tax Cash Flow

0 $7,500,000

1 650,000

2. 950,000

3 2,750,000

4 1,900,000

5 800,000

6 450,000

Prepare an after-tax cash flow table assuming MACRS depreciation.

(a)What is the before-tax rate of return?

(b)What is the after-tax rate of return?

Group of answer choices

a) 8% b) 8%

a) 0% b) 8%

a) 8% b) 0%

a) 0% b) 0%