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Firm Q is about to engage in a transaction with the following cash flows over a three-year period. Use Appendix A and Appendix B.
Firm Q is about to engage in a transaction with the following cash flows over a three-year period. Use Appendix A and Appendix B. Year 0. Year 1 Taxable revenue Deductible expenses Nondeductible expenses $ 18,300 (6,700) (725) $ 19,000 (8,700) (2,500) Year 2 $ 27,800 (9,250) 0 Required: If the firm's marginal tax rate over the three-year period is 30 percent and its discount rate is 6 percent, compute the NPV of the transaction. Note: Expenses and cash outflows should be indicated by a minus sign. Round discount factor(s) to 3 decimal places and final answer to the nearest whole dollar amount. Year 0 Year 1 Year 2 Revenue Expenses Tax cost Net cash flow $ 0 $ 0 $ 0 Discount factor Present value $ 0 $ 69 0 NPV
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