And 7

Not secure 3. Taxes as Transaction Costs 6 Flrm E must choose between two business opportunities Opportunity 1 will generate an $11,040 deductibile loss in year 0, $6,900 taxable income in year 1, and $27,600 taxable income in year 2. Opportunity 2 will generate $7,900 taxable income in year O and $6.900 taxable income in years 1 and 2 The income and loss reflect before-tax cash inflow and outflow. Firm E uses a 5 percent discount rate and has a 40 percent marginal tax rate over the three-year period. Use Appendix A and Appendo B 10 o-1. Complete the tables below to calculate NPV a2. Which opportunity should Firm E choose? b-1. Complete the tables below to calculate NPV. Assume Firm E's marginal tax rate over the three year period is 15 percent b-2. Which opportunity should Firm E choose? ok1 c-1. Complete the tables below to calculate NPV. Assume Firm E's marginal tax rate is 40 percent in year O but only 15 percent in years 1 and 2 c-2. Which opportunity should Firm E choose? Pint Complete this question by entering your answers in the tabs below Deference Show less Reg ALReg A2Reg Req B1 Req B2 Req Ci Req C2 Complete the tables below to caloulate NPW. (Cash a decimal places, intermediate calculations and final answors to the nearest whole dollar amount). outflows should be Indicated by a minus sign. Round discount factor(s) to . Befors-lax cash now Tax cost Net cash Bow Discount factor (5%) Present value NPV Tax cost Net cash ow Present value NPV