Question: Rework Example using the MACRS depreciation method (assume three-year property class) instead of the SL depreciation method.
Example: Consider the following proposed capital investment in an engineering project and determine its
(a) year-by-year ATCF,
(b) after-tax AW,
(c) annual equivalent EVA.
Proposed capital investment = $84,000
Salvage value (end of year four) = $0
Annual expenses per year = $30,000
Gross revenues per year = $70,000
Depreciation method = Straight line
Useful life = four years
Effective income tax rate (t) = 50%
After-tax MARR (i) = 12% per year