Because of tighter safety regulations, an improved air filtration system must be installed at a plant that produces a highly corrosive chemical compound. The capital investment in the system is $260,000 in presentday dollars. The system has a useful life of 10 years and is in the MACRS (GDS) five-year property class. It is expected that the MV of the system at the end of its 10-year life will be $50,000 in present-day dollars. Annual expenses, estimated in present-day dollars, are expected to be $6,000 per year, not including an annual property tax of 4% of the investment cost (does not inflate). Assume that the plant has a remaining life of 20 years and that replacement costs, annual expenses, and MV increase at 6% per year. If the effective income tax rate is 40%, set up a spreadsheet to determine theATCF for the system over a 20-year period. The after-tax market rate of return desired on investment capital is 12% per year (im). What is the PW of costs of this system after income taxes have been taken into account? Develop the real-dollarATCF. (Assume that the annual general price inflation rate is 4.5% over the 20-year period)

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1. Evaluate the project if the MAAR is 15% 2. The project life is 10 yrs 3. The cost of electricity is the same for each motor 4. The required hp requirement is 2000 hp and requires additional redundancy of at least one motor 5. Maintenance operations wants only one motor type and size 6. The factory manufactures Telephone central office equipment 7. Inflation rates for electricity and maintenance are the 3.5% each 8. Show the depreciation schedule 9. Be prepared to present the solution in class 10.Determine the BTCF and 11. The ATCF if the Tax rate is 35%