Firm E must choose between two business opportunities. Opportunity 1 will generate an $13,920 deductible loss in year 0, $8,700 taxable income in year 1, and $34,800 taxable income in year 2. Opportunity 2 will generate $9,700 taxable income in year 0 and $8,700 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 Appendix B.

Required:

1. a1. Complete the tables below to calculate NPV.
2. a2. Which opportunity should Firm E choose?
3. b1. Complete the tables below to calculate NPV. Assume Firm Es marginal tax rate over the three-year period is 15 percent.
4. b2. Which opportunity should Firm E choose?
5. c1. Complete the tables below to calculate NPV. Assume Firm Es marginal tax rate is 40 percent in year 0 but only 15 percent in years 1 and 2.
6. c2. Which opportunity should Firm E choose?