Flying Aces has a cost-plus-fixed fee contract with the air force to build jets. The government will buy any additional equipment that it needs on a justified cost-savings basis.

The incremental tax rate for the company is 35%. The company has computed the following labor savings for a new equipment that costs $45000:

	Period 1	Period 2
Before Tax	$25,000	$25,000
After Tax	$16,250	$16,250

The company has an after-tax time value of money of 6% and the federal government has a before-tax time value of money of 5%. Should the equipment be purchased?

A COMPANY-YES; GOVT-YES

B COMPANY-YES; GOVT-NO

C INDETERMINATE

D COMPANY-NO; GOVT-NO E COMPANY-NO; GOVT-YES

The Answer f is E

Please show calculation in Excel on how to get the answer and show the function page.