Problem 03-09 (Algo) [LO 3-3]

Company N will receive $125,000 of taxable revenue from a client. Use Appendix A and Appendix B.

Required:

Compute the NPV of the $125,000 assuming that Company N will receive $62,500 now (year 0) and $62,500 in year 1. The companys marginal tax rate is 30 percent, and it uses a 6 percent discount rate.

Compute the NPV of the $125,000 assuming that Company N will receive $62,500 in year 1 and $62,500 in year 2. The companys marginal tax rate is 40 percent, and it uses a 4 percent discount rate.

Compute the NPV of the $125,000 assuming that Company N will receive $25,000 now (year 0) and $25,000 in years 1, 2, 3, and 4. The companys marginal tax rate is 10 percent, and it uses a 9 percent discount rate. 1. Compute the NPV of the $125,000 assuming that Company N will receive $62,500 now (year 0) and $62,500 in year 1. The company's marginal tax rate is 30 percent, and it uses a 6 percent discount rate. Note: Round discount factor(s) to 3 decimal places, all other intermediate calculations and final answers to the nearest whole dollar amount. 2.

Compute the NPV of the $125,000 assuming that Company N will receive $62,500 in year 1 and $62,500 in year 2. The company's marginal tax rate is 40 percent, and it uses a 4 percent discount rate. Note: Round discount factor(s) to 3 decimal places, all other intermediate calculations and final answers to the nearest whole dollar amount.

3.

Compute the NPV of the $125,000 assuming that Company N will receive $25,000 now (year 0) and $25,000 in years 1, 2, 3, and 4. The company's marginal tax rate is 10 percent, and it uses a 9 percent discount rate. Note: Round discount factor(s) to 3 decimal places, all other intermediate calculations and final answers to the nearest whole dollar amount.

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APPENDIX B APPENDIX A Present Value of $1