Raytheon wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for \($1.4\) million and will have a salvage value of \($200,000\) after 8 years. Its use will create an opportunity to increase sales by \($650,000\) per year and will have operating expenses of \($250,000\) per year. All dollar amounts are expressed in real dollars.

Depreciation follows MACRS 5-year property, taxes are 40 percent, the real after-tax MARR is 10 percent, and inflation is 4.2 percent.

a. Determine the actual after-tax cash flows for each year.

b. Determine the PW of the after-tax cash flows.

c. Determine the AW of the after-tax cash flows.

d. Determine the FW of the after-tax cash flows.

e. Determine the combined IRR of the after-tax cash flows.

f. Determine the combined ERR of the after-tax cash flows.
g. Determine the real IRR of the after-tax cash flows.
h. Determine the real ERR of the after-tax cash flows.