Marla recently inherited $50,000 and is considering two alternatives for investing these funds. Investment A is stock of a C corporation, expected to pay annual dividends of 8 percent. Investment B is stock of an S corporation. Based on income projections, Marlas share of the S corporations ordinary income would be approximately $10,000 per year. However, the S corporation does not expect to make cash distributions for the foreseeable future. Marla would hold either investment for three years, at which time she believes the C corporation stock could be sold for $60,000 and the S corporation stock could be sold for $90,000.

Assume that the initial investment would be made in year 0, dividends on the C corporation stock would be received in years 1, 2, and 3; S corporation earnings would be allocated in years 1, 2, and 3; and either investment would be sold in year 3. Assume that Marla's S corporation income would not qualify for the QBI deduction. Also assume that Marlas marginal tax rate on ordinary income is 35 percent. Use Appendix A.

Required:

1. Using a 4 percent discount rate, calculate the net present value of after-tax cash flows attributable to either investment. Assume a 15% rate on capital gains and dividends.

APPENDIX A

Present Value of $1

Periods	3%	4%	5%	6%	7%	8%	9%
1	0.971	0.962	0.952	0.943	0.935	0.926	0.917
2	0.943	0.925	0.907	0.890	0.873	0.857	0.842
3	0.915	0.889	0.864	0.840	0.816	0.794	0.772
4	0.888	0.855	0.823	0.792	0.763	0.735	0.708
5	0.863	0.822	0.784	0.747	0.713	0.681	0.650
6	0.837	0.790	0.746	0.705	0.666	0.630	0.596
7	0.813	0.760	0.711	0.665	0.623	0.583	0.547
8	0.789	0.731	0.677	0.627	0.582	0.540	0.502
9	0.766	0.703	0.645	0.592	0.544	0.500	0.460
10	0.744	0.676	0.614	0.558	0.508	0.463	0.422
11	0.722	0.650	0.585	0.527	0.475	0.429	0.388
12	0.701	0.625	0.557	0.497	0.444	0.397	0.356
13	0.681	0.601	0.530	0.469	0.415	0.368	0.326
14	0.661	0.577	0.505	0.442	0.388	0.340	0.299
15	0.642	0.555	0.481	0.417	0.362	0.315	0.275
16	0.623	0.534	0.458	0.394	0.339	0.292	0.252
17	0.605	0.513	0.436	0.371	0.317	0.270	0.231
18	0.587	0.494	0.416	0.350	0.296	0.250	0.212
19	0.570	0.475	0.396	0.331	0.277	0.232	0.194
20	0.554	0.456	0.377	0.312	0.258	0.215	0.178

Periods	10%	11%	12%	13%	14%	15%	20%
1	0.909	0.901	0.893	0.885	0.877	0.870	0.833
2	0.826	0.812	0.797	0.783	0.769	0.756	0.694
3	0.751	0.731	0.712	0.693	0.675	0.658	0.579
4	0.683	0.659	0.636	0.613	0.592	0.572	0.482
5	0.621	0.593	0.567	0.543	0.519	0.497	0.402
6	0.564	0.535	0.507	0.480	0.456	0.432	0.335
7	0.513	0.482	0.452	0.425	0.400	0.376	0.279
8	0.467	0.434	0.404	0.376	0.351	0.327	0.233
9	0.424	0.391	0.361	0.333	0.308	0.284	0.194
10	0.386	0.352	0.322	0.295	0.270	0.247	0.162
11	0.350	0.317	0.287	0.261	0.237	0.215	0.135
12	0.319	0.286	0.257	0.231	0.208	0.187	0.112
13	0.290	0.258	0.229	0.204	0.182	0.163	0.093
14	0.263	0.232	0.205	0.181	0.160	0.141	0.078
15	0.239	0.209	0.183	0.160	0.140	0.123	0.065
16	0.218	0.188	0.163	0.141	0.123	0.107	0.054
17	0.198	0.170	0.146	0.125	0.108	0.093	0.045
18	0.180	0.153	0.130	0.111	0.095	0.081	0.038
19	0.164	0.138	0.116	0.098	0.083	0.070	0.031
20	0.149	0.124	0.104	0.087	0.073	0.061	0.026

Complete this question by entering your answers in the tabs below. Using a 4 percent discount rate, calculate the net present value of after-tax cash flows attributable to either investment. Assume a 15% rate on capital gains and dividends. Use appropriate factors from the Appendix A. Note: Negative amounts should be indicated by a minus sign. Round intermediate calculations to the nearest whole dollar amount