A tractor for over-the-road hauling is to be purchased by AgriGrow for $84,000. It is expected to be of use to the compa

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A tractor for over-the-road hauling is to be purchased byAgriGrow for $84,000. It is expected to be of use to the companyfor 6 years, after which it will be salvaged for $3,600.Transportation cost savings are expected to be $150,000 peryear; however, the cost of drivers is expected to be$60,000 per year, and operating expenses are expected to be$49,000 per year, including fuel, maintenance, insurance, andthe like. The company’s marginal tax rate is 25 percent,and MARR is 10 percent on after-tax cash flows.Suppose that, to AgriGrow’s surprise, they actually dispose of thetractor at the end of the fourth tax year for $5,600. Developtables using a spreadsheet to determine the ATCF for each year andthe after-tax PW, AW, IRR, and ERR after only 4 years.
A) Use MACRS-GDS and state theappropriate property class.
End of Year
ATCF
0
1
2
3
4
After-tax PW: $After-tax AW: $For dollar amounts, carry all interim calculations to 5decimal places and then round your final answer to the nearestdollar. The tolerance is ±10.After-tax IRR: %After-tax ERR: %
B) Use double declining balancedepreciation.
End of Year
ATCF
0
1
2
3
4
After-tax PW: $After-tax AW: $For dollar amounts, carry all interim calculations to 5decimal places and then round your final answer to the nearestdollar. The tolerance is ±10.After-tax IRR: %After-tax ERR: %