answer the questions

After-tax cash flows, profitability index: service firm The owner of Black Hills Cafe is considering the purchase of a new semi-automatic coffee-making machine. The machine will cost $75 OOO and last 10 years. The machine is expected to have no salvage value at the end of its useful life. The owner estimates that the new machine will generate $12 000 in after-tax savings each year during its life (including the tax effect of depreciation). The depreciation charge is the same for accounting and tax purposes Required: Calculate the profitability index for the proposed vending machine, assuming the after-tax required rate of return of (a) 6 per cent. (b) 8 per cent. (c) 10 per cent