Raytheon wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for $1,340,000 and will have a salvage value of $170,000 after 8 years. Its use will create an opportunity to increase sales by $650,000 per year and will have operating expenses of $250,000 per year. All dollar amounts are expressed in real dollars. Depreciation follows MACRS 5-year property, taxes are 40%, the real after-tax MARR is 10%, and inflation is 3.4%.

Raytheon wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for $1,340,000 and will have a salvage value of $170,000 after 8 years. Its use will create an opportunity to increase sales by $650,000 per year and will have operating expenses of $250,000 per year. All dollar amounts are expressed in real dollars. Depreciation follows MACRS 5-year property, taxes are 40%, the real after-tax MARR is 10%, and inflation is 3.4% a. Determine the actual after-tax cash flows for each year ATCF0 = $ ATCF1 = $ ATCF2 = $ ATCF3 = $ ATCF4 ATCF5 = $ ATCF6 = $ ATCF8 = $ b. Determine the PW of the after-tax cash flows c. Determine the AW of the after-tax cash flows AN ST = $ d. Determine the FW of the after-tax cash flows FWST= e. Determine the combined IRR of the after-tax cash flows IRRc f. Determine the combined ERR of the after-tax cash flows ERRc g. Determine the real IRR of the after-tax cash flows IRRr- h. Determine the real ERR of the after-tax cash flows