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Firm D is considering investing $678,000 cash in a three-year project with the following cash flows. Use Appendix A and AppendixB. Required: a1. The revenue
Firm D is considering investing $678,000 cash in a three-year project with the following cash flows. Use Appendix A and AppendixB. Required: a1. The revenue is taxable, the expenses are deductible, and the marginal tax rate is 15 percent. Use a 10 percent discount rate to compute NPV. a2. Should firm D make the investment? b1. The revenue is taxable, the expenses are deductible, and the marginal tax rate is 40 percent. Use a 10 percent discount rate to compute NPV. b2. Should firm D make the investment? c1. The revenue is taxable, only one-half of the expenses are deductible, and the marginal tax rate is 15 percent. Use a 10 percent discount rate to compute NPV. c2. Should firm D make the investment? d1. Firm D can deduct the expenses in the year paid (against other sources of income) but can defer recognizing the $298,800 total income until year 2 . (It will collect the revenues as indicated in years 0,1 , and 2 so that before-tax cash flows don't change.) The marginal tax rate is 40 percent. Use a 10 percent discount rate to compute NPV. d2. Should firm D make the investment? Complete this question by entering your answers in the tabs below. Firm D can deduct the expenses in the year paid (against other sources of income) but can defer recognizing the $298,800 total income until year 2 . (It will collect the revenues as indicated in years 0,1 , and 2 so that before-tax cash flows don't change.) The marginal tax rate is 40 percent. Use a 10 percent discount rate to compute NPV. Note: Deductions and Cash Outflows should be entered with a minus sign. Round discount factor(s) to 3 decimal places, all other intermediate calculations and final answers to the nearest whole dollar amount. a$298,800 total income until year 2 . (It will collect the revenues as indicated in years 0,1 , and 2 so that before-tax cash flows don't change.) The marginal tax rate is 40 percent. Use a 10 percent discount rate to compute NPV. Note: Deductions and Cash Outflows should be entered with a minus sign. Round discount factor(s) to 3 decimal places, all other intermediate calculations and final answers to the nearest whole dollar amount
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