A granary is considering a conveyor used in the manufacture of grain for transporting, filling, or emptying. It can be purchased and installed for $70,000 with $3,000 salvage value after 16 years. Operation and maintenance is expected to be $18,000 per year. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40 percent, and a MARR of 9 percent after taxes. If this conveyor is put into service, it will be the only capital investment for the year.

a. Determine the after-tax annual worth assuming the investment tax credit has been reinstated at the 10 percent level.

b. Determine the after-tax annual worth, assuming the Section 179 expense deduction is used.