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QUESTION 8 Spotted Potato is evaluating a project that would require the purchase of a piece of equipment for $ 4 9 6 , 0

QUESTION 8
Spotted Potato is evaluating a project that would require the purchase of a piece of equipment for $496,000 today. During year 1, the project is expected to have relevant revenue of $404,000, relevant costs of $157,000, and relevant depreciation of $111000. Spotted Potato would need to borrow $496,000 today for the equipment and would need to make an interest payment of $28,000 to the bank in 1 year. Relevant operating cash flow for the project in year 1 is expected to be $192,000. What is the tax rate expected to be in year 1?
14.73%(plus or minus 3 bps)
40.44%(plus or minus 3 bps)
18.38%(plus or minus 3bps)
56.26%(plus or minus 3 bps)
none of the answers are within 3bps of the correct answer
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