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Mr. and Mrs. Rath invested in a business that will generate the following cash flows over a three-year period. Year 0 Year 1 Year
Mr. and Mrs. Rath invested in a business that will generate the following cash flows over a three-year period. Year 0 Year 1 Year 2 Taxable 30,000 40,000 60,000 revenue Deductible (15,000) (15,000) (20,000) expenses If the Raths' marginal tax rate over the three year period is 20% and they use a 6% discount rate, compute the NPV of the transaction. Present Value of $1 at a 6% discount rate is as follows: End of Period 0-$1, End of Period 1-$.943, End of Period 2 = $.890 $59,340 $55,996 O $50,413 None of the above
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