Mr. and Mrs. Rath invested in a business that will generate the following cash flows over a three-year period. Use Appendix A. Year 0 Year 1 Year 2 Taxable revenue30,000 40,000 60,000 Deductible expenses(15,000) (15,000) (20,000) If the Raths' marginal tax rate over the three-year period is 20% and they use a 6% discount rate, compute the NPV of the transaction.
A. $55,996
B. $59,340
C. $50,413
D. None of the above.
Answer: B
You might also like to view...
Which is a characteristic of virtual communities?
a. decreasing popularity because of disadvantages b. connection among people with common interests, beliefs, and ideas c. decreased sense of relationship compared to face-to-face interactions d. geographical isolationism
A firm's balance sheet provides a representation of the current market value of the company
Indicate whether the statement is true or false
A beneficiary ordinarily has no right to sell his interest in trust assets before he is entitled to receive the corpus
Indicate whether the statement is true or false
Bill recently borrowed $50 from Ricardo for a couple of weeks. Bill, still short of cash, tells Ricardo, "I will wash and wax your car in exchange for the $50 I owe you." Ricardo tells Bill, "OK, that's great!" Ricardo's performance of his new duty will be a(n):
A) accord. B) novation. C) rescission. D) satisfaction.