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Hansen Company, a cash basis taxpayer, paid $50,000 for an asset in year 0. Assume it can deduct one half of the cost in year
Hansen Company, a cash basis taxpayer, paid $50,000 for an asset in year 0. Assume it can deduct one half of the cost in year and the remainder in year 1. Assume a 21 percent tax rate and 8 percent discount rate. Use Anpendix A. Required: a. Calculate the net present value of Hansen's after-tax cost of the asset. b. Now assume Hansen borrows the $50,000 needed to purchase the asset. It repays the loan in year 2, with interest of $10,000. Calculate the net present value of Hansen's after-tax cost of the asset under these new facts. Complete this question by entering your answers in the tabs below. Required A Required B Calculate the net present value of Hansen's after-tax cost of the asset. (Round your intermediate calculations to the nearest whole dollar amount Negative amount should be indicated by a minussian) NPV of after-tax cost Roque Required B
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