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Firm Z must choose between two alternative transactions. Transaction 1 requires a $9,000 cash outlay that would be nondeductible in the computation of taxable income.
Firm Z must choose between two alternative transactions. Transaction 1 requires a $9,000 cash outlay that would be nondeductible in the computation of taxable income. Transaction 2 requires a $13,500 cash outlay that would be deductible expense. Determine which transition has the lesser after tax cost, if the firm Z's marginal tax rate is 20%
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