Company K has a 30 percent marginal tax rate and uses a 7 percent discount rate to compute NPV. The company started a venture that will yield the following before-tax cash flows: year 0, $12,000; year 1, $21,000; year 2, $24,000; year 3. $17,600. Use Appendix A and Appendix B Required: a. If the before-tax cash flows represent taxable income in the year received, compute the NPV of the cash flows. b. Compute the NPV If Company K can defer the receipt of years and 1 cash flows/income until year 2. (It would receive no cash in years 0 and 1 and would receive $57,000 cash in year 2.) c. Compute the NPV if Company K can defer paying tax on years 0 and 1 cash flows untill year 2. (It would receive $24,000 cash in year 2 but would pay tax on $57,000 income.) Complete this question by entering your answers in the tabs below. Required A Required B Required If the before-tax cash flows represent taxable income in the year received, compute the NPV of the cash flows. (Cash outflows should be indicated by a minus sign. Round discount factors to 3 decimal places. Round Intermediate calculations and final answers to the nearest whole dollar amount.) Year o Year 1 Year 2 Year 3 Before-tax cash flow/taxable income 12,000 $ 21,000 $ 24,000 5 17,600 Tax cost After-tax cash flow $ 12,000 $ 21,000 $ 24,000 $ 17,600 Discount factor (7%) 0.935 0.873 0.816 Present value $ 12,000 $ 19,635 $ 20,952 $ 14,362 NPV S 46.864 $ Appendix A Present Value of $1 Periods 3% 6% 7% 8% 9% 1 917 842 772 OWN - 4% 962 925 889 855 822 790 760 731 703 676 650 .625 .601 971 943 915 888 863 837 .813 789 766 .744 .722 701 .681 661 642 623 1605 587 570 554 7 8 9 10 11 12 13 14 15 16 17 18 19 20 5% 952 907 864 823 784 .746 .711 677 645 614 585 557 530 505 481 458 436 416 396 377 943 890 840 .792 .747 -705 665 627 592 558 .527 497 469 442 417 394 371 350 331 312 935 873 816 763 .713 666 623 582 544 50B 475 444 415 388 362 339 317 296 277 258 926 857 -794 735 681 630 583 540 500 463 429 397 368 340 315 292 270 250 232 215 708 650 596 547 502 460 422 388 356 326 299 275 252 231 212 1194 178 577 555 534 513 494 475 .456 12% 14% Periods 1 2 3 4 10% 909 826 751 683 621 564 513 467 424 386 350 319 290 263 239 218 198 180 154 149 11% 901 812 731 659 593 535 482 434 391 352 317 286 258 232 209 188 170 153 138 124 8 9 10 11 12 13 14 15 16 17 18 19 20 20% 833 694 579 482 402 335 279 233 194 13% 885 783 693 613 543 480 425 1376 333 295 261 231 204 1181 160 141 125 111 098 087 893 797 712 636 567 507 452 404 361 322 287 257 229 205 1183 163 146 130 116 104 877 769 675 592 519 456 400 351 308 270 237 208 6182 160 140 123 108 095 083 073 15% 870 756 1658 572 497 432 376 327 284 247 215 182 163 141 123 107 093 081 070 061 162 135 112 093 078 065 054 045 038 031 026 Appendix B Present Value of Annuity of $1 Periods 3% 4% 6% 8% 1 2 3 7 8 9 10 11 12 13 14 15 16 17 18 19 20 971 1.913 2.829 3.717 4.580 5.417 6.230 7.020 7.786 8.530 9.253 9.954 10.635 11.296 11.938 12.561 13.166 13.754 14.324 14.877 .962 1.886 2.775 3.630 4.452 5.242 6.002 6.733 7.435 8.111 8.760 9,385 9.986 10.563 11.118 11.652 12.166 12.659 13.134 13.590 5% 952 1.859 2.723 3.546 4329 5.076 5.786 6.463 7.108 7.722 8.306 8.863 9.394 9.899 10.380 10.838 11.274 11.690 12.085 12.462 943 1833 2673 3.465 4.212 4917 5.582 6.210 6.802 7.360 7.887 8.384 8.853 9.295 9.712 10.106 10.477 10.828 11.158 11.470 7% 935 1.808 2.624 3.387 4.100 4.767 5.389 5.971 6.515 7.024 7.499 7.943 8.358 8.745 9.108 9,447 9.763 10.059 10.336 10.594 926 1.783 2.577 3.312 3.993 4.623 5.206 5.747 6.247 6.710 7.139 7536 7.904 8.244 8.559 8.851 9.122 9.372 9.604 9.818 9% 917 1.759 2531 3.240 3.890 4.486 5.033 5.535 5.995 6.418 6.805 7.161 7.487 7.786 8.061 8.313 8.544 8.756 8.950 9.129 11% 13% Periods 1 2 3 12% 893 1.690 2.402 3.037 3.605 10 11 12 13 14 15 16 17 18 19 20 10% 909 1.736 2487 3.170 3.791 4.355 4.868 5.335 5.759 6.145 6.495 6.814 7.103 7.367 7.606 7.824 8.022 8.201 8.365 8,514 901 1.713 2.444 3.102 3.696 4.231 4.712 5.146 5.537 5.889 6 207 6.492 6.750 6.982 7.191 7.379 7.549 7.702 7.839 7.963 4.564 4.968 5.328 5.650 5.938 6.194 6.424 6.628 6.811 6.974 7.120 7.250 7.366 7.469 B85 1.668 2.361 2.974 3.517 3.998 4.423 4.799 5.132 5.426 5687 5.918 6.122 6.302 6.462 6,604 6.729 6.840 6.938 7:025 14% 877 1647 2.322 2.914 3.433 3.889 4 288 4.639 4.945 5.216 5.453 5.660 5.842 6.002 6.142 6.265 6.373 6.467 6.550 6.623 15% 870 1.626 2.283 2.855 3.352 3.784 4.160 4.487 4.772 5.019 5.234 5.421 5.583 5.724 5.847 5.954 6047 6.128 6.198 6.259 20% 833 1.528 2.106 2.589 2991 3.326 3.605 3837 4.031 4.192 4.327 4.439 4533 4611 4.675 4.730 4.775 4.812 4.843 4870
