1. Your firm purchased machinery with a 7-year MACRS life of $10 million. The project, however, will end after 4 years. If the equipment is sold for $4.5 million at the end of the project, what is the after-tax cash flow from the sale of the machinery. The tax rate is 20 percent.

MACRS 7-year Schedule

Year 1: 14.29%

Year 2: 24.49%

Year 3 17.49%

Year 4 12.49%

Year 5 8.93%

Year 6 8.92%

Year 7 8.93%

Year 8 4.46%