A Boeing contractor responsible for producing a portion of the landing gear for huge airliners experienced a storm-related power glitch during the multi-axis milling, to tolerances less than 0.001 inch, of a large and complex part. The value already in the part, plus the equipment damage, was \($300,000.\) Risk analysis indicated that a similar cost might occur once per year on average if nothing is done. PolyPhaser, a leader in lightning and surge protection, was commissioned to do a turnkey installation to protect the process from similar yearly losses. The first cost is \($480,000\) installed. A total of \($275,000\) is borrowed at a rate of 12 percent per year for the entire 10-year planning horizon. Deductible annual operating and maintenance costs are \($Y,\) and depreciation is MACRS-GDS in the 7-year property class. The marginal tax rate is 40 percent, ATMARR is 10 percent, and the expected life of the PolyPhaser equipment is 10 years. There is no salvage value. Use Goal Seek or Solver in Excel® to determine the value of Y such that ATMARR is exactly achieved, no more and no less, if

a. the loan is paid back using Method 1 (interest only at the end of each year of the loan, plus principal at the end of the last year).

b. the loan is paid back using Method 2 (equal annual principal payments plus interest on the unpaid loan balance).

c. the loan is paid back using Method 3 (equal annual principal plus interest payments during each year of the loan).

d. the loan is paid back using Method 4 (principal plus interest is paid at the end of the loan period).