Question
XYZ is evaluating a project that would require the purchase of a piece of equipment for $510,000 today. During year 1, the project is expected
XYZ is evaluating a project that would require the purchase of a piece of equipment for $510,000 today. During year 1, the project is expected to have relevant revenue of $755,000, relevant costs of $204,000, and relevant depreciation of $134,000. XYZ would need to borrow $510,000 today to pay for the equipment and would need to make an interest payment of $23,000 to the bank in 1 year. Relevant net income for the project in year 1 is expected to be $350,000. What is the tax rate expected to be in year 1?
Answers:-
A rate equal to or greater than 18.07% but less than 31.96% | ||
A rate equal to or greater than 16.54% but less than 18.07% | ||
A rate equal to or greater than 13.31% but less than 16.54% | ||
A rate less than 13.31% or a rate greater than 57.58% | ||
A rate equal to or greater than 31.96% but less than 57.58% |
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