Gillespie Gold Products, Inc., is considering the purchase of new smelting equipment. The new equipment is expected to increase production and decrease costs, with a resulting increase in profits. First Cost is at $40,000; Savings per year is $10,000; Actual useful life is 5 years; Salvage value is $4000. a. Determine the ATCF using a tax rate of 42% and straight-line method of depreciation. b. If the average yearly inflation rate for the 5-year study period is 3.5%, what is the real-dollar ATCF that is equivalent to the actual-dollar ATCF? The base time period is year zero (b=0).

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