Question
In six years, Shu Company plans to receive $15,000 cash from the sale of a machine that has a $17,000 book value. Year FV of
In six years, Shu Company plans to receive $15,000 cash from the sale of a machine that has a $17,000 book value.
| Year | FV of $1 at 12% | FV of an ordinary annuity at 12% | PV of $1 at 12% | PV of an ordinary annuity at 12% | |||||||||||
| 1 | 1.120 | 1.000 | 0.893 | 0.893 | |||||||||||
| 2 | 1.254 | 2.120 | 0.797 | 1.690 | |||||||||||
| 3 | 1.405 | 3.374 | 0.712 | 2.402 | |||||||||||
| 4 | 1.574 | 4.779 | 0.636 | 3.037 | |||||||||||
| 5 | 1.762 | 6.353 | 0.567 | 3.605 | |||||||||||
| 6 | 1.974 | 8.115 | 0.507 | 4.111 | |||||||||||
If the firm is subject to a 30% income tax rate and has a(n) 12% after-tax hurdle rate, the correct discounted net cash flow would be:
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Accounting For MBAs
Authors: Peter Easton, Robert Halsey, Mary Lea McAnally, John Wild
8th Edition
1618533584, 9781618533586
