A special handling device for the manufacture of food is placed in service. It costs $30,000 and has a salvage value of $2,000 after a useful life of 5 years. The device generates a savings of $14,000 per year. Corporate income taxes are 40 percent. Find the after-tax cash flow for each year if:

a.Depreciation allowances are $9,999, $13,335, $4,443, $2,223, and $0 for years 1-5 (MACRS-GDS 3-year property class).

b.Depreciation allowances are $7,500 for each of years 1-4 and $0 in year 5 (SLN depreciation only over the first 4 years).