after tax MARR is 15% and the effective tax rate is 25%. a. Compute the after-tax cash flows. b. Compute the after-tax present worth of the project, and use a uniform gradient in your formulation c. The before-tax present worth of this asset is -$16,851. By how much would the annual revenues have to increase to make the purchase of this asset justifiable on a before-tax basis?

after tax MARR is 15% and the effective tax rate is 25%. a. Compute the after-tax cash flows. b. Compute the after-tax present worth of the project, and use a uniform gradient in your formulation c. The before-tax present worth of this asset is -$16,851. By how much would the annual revenues have to increase to make the purchase of this asset justifiable on a before-tax basis?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Consider an asset that costs $675,160 and is depreciated straight-line to 95,927 over its 10-year tax life. The asset is to be used in a 7-year project; at the end of the project, the asset can be sold for $226,338. If the relevant tax rate is 0.21, what is the aftertax cash flow from the sale of this asset (SVNOT)?
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