A project requires an initial investment of $20,000. It will generate a positive cash flow of $8,000 for an 8 year period but needs $3,000 annually as operating cost during this period. Subsequently the assets involved will be put on standby with zero net cash flow. Effective tax rate is 40%. (a) Calculate the project's potential rate of return before tax. (6 marks) Calculate the project's potential rate of return after tax using straight line depreciation for writing off the assets for tax purposes for the 8 years. (6 marks) (b) Calculate the project's potential rate of return after tax using straight line depreciation for writing off the assets for tax purposes for the 20 years. (13 marks) A project requires an initial investment of $20,000. It will generate a positive cash flow of $8,000 for an 8 year period but needs $3,000 annually as operating cost during this period. Subsequently the assets involved will be put on standby with zero net cash flow. Effective tax rate is 40%. (a) Calculate the project's potential rate of return before tax. (6 marks) Calculate the project's potential rate of return after tax using straight line depreciation for writing off the assets for tax purposes for the 8 years. (6 marks) (b) Calculate the project's potential rate of return after tax using straight line depreciation for writing off the assets for tax purposes for the 20 years. (13 marks)