Problem $5$

Intro

Southwest Airlines just bought a new jet for $$27,000,000.$ The jet falls into the $7-$year MACRS category, with the

following depreciation rates $($half$-$year convention$)$:

The jet can be sold for $$21,600,000$ after $5$ years. The company has a marginal tax rate of $34\%.$

Part $1$

What is the book value at the end of year $5?$

Part $2$

What is the after$-$tax cash flow at the end of year $5?$