(Uncertain annual cash flow) Conch and Associates, CPAs, is considering the in¬ stallation of a voice mail system. The initial cost of the system would be $50,000. The expected life of the technology is 5 years.

a. Given that the company’s cost of capital is 10 percent, how much annual after-tax labor savings are necessary to minimally justify the investment.

b. Given your answer in part a and the fact that the company’s tax rate is 40 percent, how much pretax labor savings are necessary to justify the invest¬ ment (ignore tax)?