1. A new mechanical system being considered for a plant will replace four (4) handlers/workers. Currently each of these handlers is paid at the rate of $15,000/year, and the salary is expected to increase $2,000 every year over the net 5 years. The taxes and maintenance charges on this new machine is estimated to be about 8% per year. If the money is worth 10% after taxes, how much investment can be justified on this equipment? Assume SOYD depreciation method is used on this machine. A salvage value of $10,000 is expected at the end of 5 years. Income tax=34%

2. Our company is considering the installation of a new material handling (mechanical) system that costs $150,000. This system is expected to save our company $32,000 per year in labor costs for the next 15 years. Maintenance costs are expected to average $8,000 per year. Using straight-line depreciation, $0 salvage value and a total income tax rate (ITR) of 34%, determine the after-tax rate of return for the this project.