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I calculated the answer. I just want to make sure I did it right. Please consider the years as 0, 1, 2. Thanks! Firm D
I calculated the answer. I just want to make sure I did it right. Please consider the years as 0, 1, 2. Thanks! Firm D is considering investing $100,000 cash in a three year project with the following cash flows: Year 0 Year 1 Year 2 Investment/(Return of Investment) $(100,000) $0 $100,000 Revenues 60,000 60,000 35,000 Expenses (20,000) (20,000) (10,000) Before-tax net cash flow $(60,000) $40,000 $125,000 Determine if Firm D should make the investment. Use an 8% discount rate. a. The revenue is taxable, the expenses are deductible, and the marginal tax rate is 20%
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