340 upany Khas a $4,000 loss before considering the additional deduction. pany P must choose between two alternate transactions. The cash nerated by Transaction 1 is taxable, and the cash generated by Transaction bis nontaxable. Determine the marginal tax rate at which the after-tax cash flows from the two transactions are equal assuming that: Transaction I generates $100.000 of income and Transaction 2 generates S60,000 of income. b. Transaction i generates $160,000 of income and Transaction 2 generates $120,000 of income. 9. Company N will receive $100,000 of taxable revenue from a client. Compute the NPV of the $100,000 in each of the following cases a. Company N will receive $50,000 now (year o) and $50,000 in year 1. The company's marginal tax rate is 30 percent, and it uses a 6 percent discount rate. b. Company N will receive $50.000 in year 1 and $50,000 in year 2. The company's marginal tax rate is 40 percent, and it uses a 4 percent discount rate. c. Company N will receive $20,000 now (year o) and $20,000 in years 1, 2, 3, and 4. The company's marginal tax rate is 10 percent, and it uses a 9 percent discount rate. 10. Taxpayer Y, who has a 30 percent marginal tax rate, invested $65,000 in a bond that pays 8 percent annual interest. Compute Y's annual net cash flow from this investment assuming that: a. The interest is tax-exempt income. b. The interest is taxable income. 11. Investor B has $100,000 in an investment paying 9 percent taxable interest per annum. Each year B incurs $825 of expenses relating to this investment. Compute B's annual net cash flow assuming the following: a. B's marginal tax rate is 10 percent, and the annual expense is not deductible. b. B's marginal tax rate is 35 percent, and the annual expense is deductible. c. B's marginal tax rate is 25 percent, and the annual expense is not deductible. d. B's marginal tax rate is 40 percent, and only $500 of the annual expense is deductible. E N 12. Page 3-22 Firm E must choose between two alternative transactions Transaction requires a $9,000 cash outlay that would be nondeductible in the computation of taxable income. Transaction 2 requires a $13.500 cash outlay that would be a deductible expense. Determine which transaction has 2000 44, ow 360 3640 U