Question
Orange Valley Media is evaluating a project that would require the purchase of a piece of equipment for 860,000 dollars today. During year 1, the
Orange Valley Media is evaluating a project that would require the purchase of a piece of equipment for 860,000 dollars today. During year 1, the project is expected to have relevant revenue of 889,800 dollars, relevant costs of 348,300 dollars, and relevant depreciation of 57,600 dollars. Orange Valley Media would need to borrow 860,000 today for the equipment and would need to make an interest payment of 34,300 dollars to the bank in 1 year. Relevant operating cash flow for the project in year 1 is expected to be 480,335 dollars. What is the tax rate expected to be in year 1? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.
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