Question: Please show work. ? A Machine was purchased 4 years ago for $28,000. Its estimated life was 7 years with $0 salvage. Its market value

Please show work.

? Please show work. ? A Machine was purchased 4 years ago

A Machine was purchased 4 years ago for $28,000. Its estimated life was 7 years with $0 salvage. Its market value today is $35,000. It is thought that its market value in 3 more years will be $12,000. 5 year MACRS deprecation is being used. BTCF last year $26,000 and is fully inflation responsive. Inflation is expected to average 3.5% for each of the next 3 years. The tax rate is 40% on ordinary income and 20% on capital gains, Calculate the prospective inflation Free IRR(io) for this machine if it is kept for three more years

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