A corporation with a 34% income tax rate is considering the following investment in research equipment and has projected the benefits as follows

                        Before-Tax

Year                Cash Flow

0                      -$50,000

1                      +2,000

2                      +8,000

3                      +17,600

4                      + 13,760

5                      +5,760

6                      +2,880

Prepare a cash flow table to determine the year by- year after-tax cash flow assuming MACRS depreciation.

(a) What is the after-tax rate of return?

(b) What is the before-tax rate of return?