In 2020, you purchased a piece of equipment for $X. You will use the Straight Line Depreciation method and will use a depreciable salvage value of $6,000. The equipment has a depreciable and useful life of five years. The first-year benefit is $20,000 and increases by $5,000 each year thereafter. You sell the equipment at the end of year 5 for a market value of $Y. You are in the 32% income tax bracket. Ordinary gains/losses are taxed at 18% and capital gains are taxed at 15%.

Variable Values:

$120,000 < $X < $130,000

$10,000 < $Y < $25,000

Answer the following questions:

1. What amount of taxes do you owe (or get refunded) on the depreciation recapture (tax on the sale of the equipment)?
2. What is the value of the After Tax Cash Flow in year 5?
3. What is the After Tax ROR on the investment?
4. If you have a MARR of 10% is this a good investment?
5. NOTE: solve this problem using EXCEL