Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 4

Automatic inspection equipment purchased for $78,000 by Stimson Engineering generated an average of $26,080 annually in before-tax cash flow during its 5-year estimated life. This represents a return of 20%. However, the corporate tax expert said the CFAT was only $15,000 per year. If the corporation wants to realize an after-tax return of 10% per year, for how many more years must the equipment remain in service