A tractor for over-the-road hauling is to be purchased by AgriGrow for $90,000. It is expected to be of use to the company for 6 years, after which it will be salvaged for $4,000. Transportation cost savings are expected to be $170,000 per year; however, the cost of drivers is expected to be $70,000 per year, and operating expenses are expected to be $63,000 per year, including fuel, maintenance, insurance, and the like. The company’s marginal tax rate is 40 percent, and MARR is 10 percent on after-tax cash flows. Suppose that, to AgriGrow’s surprise, they actually dispose of the tractor at the end of the fourth tax year for $6,000. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR after only 4 years.

a) Use straight-line depreciation (no half-year convention) to find ATCF for each year (from End of Year 1 to 4), after-tax PW, AW, ERR, and IRR.

b) Use MACRS-GDS and state the appropriate property class to find ATCF for each year (from End of Year 1 to 4), after-tax PW, AW, ERR, and IRR.

c) Use double declining balance depreciation (no half-year convention, no switching) to find ATCF for each year (from End of Year 1 to 4), after-tax PW, AW, ERR, and IRR.