Mrs. Biggs 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 45,000 70,000 Deductible expenses(15,000) (15,000) (20,000)Nondeductible expenses(1,000) (4,000) (10,000)If Mrs. Biggs' marginal tax rate over the three-year period is 30% and she uses a 6% discount rate, compute the NPV of the transaction.
A. $47,781
B. $61,453
C. $52,771
D. None of the above.
Answer: A
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