Round to nearest whole dollar amount A-B

Hansen Company, a cash basis taxpayer, paid $50,000 for an asset in year 0. Assume it can deduct one-half of the cost in year O and the remainder in year 1. Assume a 21 percent tax rate and 8 percent discount rate. Use Appendix A. a. Calculate the net present value of Hansen's after-tax cost of the asset. b. Now assume Hansen borrows the $50,000 needed to purchase the asset. It repays the loan in year 2, with interest of $10,000 Calculate the net present value of Hansen's after-tax cost of the asset under these new facts