Woodard Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of trenching machines. The outlay required is $800,000. The NC equipment will last five years with no expected salvage value. The expected after-tax cash flows associated with the project follow:
Year Cash Revenues Cash Expenses
1 $1,600,000 $1,292,000
2 1,600,000 1,292,000
3 1,600,000 1,292,000
4 1,600,000 1,292,000
5 1,600,000 1,292,000

Required:
a. Compute the NC equipment's ARR.