Suppose Milliken has an opportunity with similar cash flows to those in problem 21 for a digitally controlled dyer, although there are no depreciable items. They can invest in a marketing study by a blue-ribbon consultancy costing \($400,000.\) Expected net returns are \($95,000\) per year over 7 years and \($125,000\) during the eighth year. Milliken’s tax rate is 40 percent, and the after-tax MARR is 12 percent.

a. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR after 8 years.

b. Compare the results of Part a with those of Problem 21b, where MACRS-GDS is used. Explain the differences.