Tax - Calculating tax in free cash flow

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Roadall, a large road construction firm that operates in three provinces, is
considering the purchase of ten newly designed, heavy-duty road graders to
replace its current fleet. One of the advantages of these new road graders is their increased stability, which Roadall believes will cut in half the frequency with which
graders roll over, injuring or killing operators. Such injuries and fatalities have
proved a significant loss exposure for Roadall. Additional advantages of these new graders are that they are more fuel-efficient and productive than the graders
Roadall is now using.
The new graders, which Roadall can purchase for $40,000 each, can be expected
to have a useful life of seven years, with no salvage value. If Roadall management
wishes to earn an annual after tax, time adjusted rate of return of at least 16% on
its funds, compute the minimum after-tax cash flow that each grader would have to
generate to attain this rate of return. (For 16%, 7 years, the present value factor is
4.039).