1. An asset used in a 4-year project falls in the 5-year MACRS class (MACRS Table) for tax purposes. The asset has an acquisition cost of $15,480,000 and will be sold for $3,440,000 at the end of the project. Required: If the tax rate is 34 percent, what is the aftertax salvage value of the asset? $3,179,881 $2,270,400 $3,700,119 $3,338,875 $3,020,887
2. A 11-year project has an initial fixed asset investment of $14,700, an initial NWC investment of $1,400, and an annual OCF of -$22,400. The fixed asset is fully depreciated over the life of the project and has no salvage value. Required: If the required return is 17 percent, what is the project's equivalent annual cost, or EAC? (Do not round your intermediate calculations.)