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XYZ is evaluating a project that would require the purchase of a piece of equipment for $540,000 today. During year 1, the project is expected
XYZ is evaluating a project that would require the purchase of a piece of equipment for $540,000 today. During year 1, the project is expected to have relevant revenue of $784,000, relevant costs of $208,000, and relevant depreciation of $130,000. XYZ would need to borrow $540,000 today to pay for the equipment and would need to make an interest payment of $21,000 to the bank in 1 year. Relevant net income for the project in year 1 is expected to be $345,000. What is the tax rate expected to be in year 1? A rate equal to or greater than 36.19% but less than 50.03% A rate less than 20.29% or a rate greater than 50.03% A rate equal to or greater than 26.52% but less than 36.19% A rate equal to or greater than 23.21% but less than 26.52% A rate equal to or greater than 20.29% but less than 23.21%
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