I had a 50/50 chance of getting this question right and the answer is 12.2%, but I don't know how to draw that conclusion. The problem is: Would you prefer a fully taxable investment earning 12.2% or a tax exempt investment of 9.2%. Assuming a 24% tax rate. Please help me understand.
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I had a 50/50 chance of getting this question right and the answer is 12.2%, but I don't know how to draw that conclusion. The problem is:
Would you prefer a fully taxable investment earning 12.2% or a tax exempt investment of 9.2%. Assuming a 24% tax rate.
Please help me understand.
The tax exempt investment is a type of investment in which the tax will not be applied in case of interest payments or returns.
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- c. What are the interest tax shields from the project? What is their present value? d. Show that the APV of Alcatel-Lucent's project matches the value computed using the WACC method Make sure to provide in TEXT. No to SNIP AND HANDRWRITING. MAKE SURE IT IS CORRECT ALSO. NOT FROM CHAT GOT. Clean format. Thank you. I’ll rate you uplikeYou are in a high tax bracket and would like to minimize the tax burden of investment portfolio. You are planning to buy and sell to maximize the aftertax returns. Do you agree with her planning? Is this plan correct? Explain.Please provide as much detail as possible. It must be a detailed explanation for each. What are some of the tax-factor benefits of capital budgeting? a) annual depreciation... how and why is it a benefit? b) interest on loans...why? c) investment tax credits...why?
- I just need someone to verify that these are correct. If not, could you explain what I did incorrectly? To get the NPV for each I used the perpetuity formula but subtracted the initial investment from whatever it gave me. For example, for the first one I did [(1,820,000/.064) - $10,400,000]You are evaluating a project that will require an investment of $18 million that will be depreciated over a period of 18 years. You are concerned that the corporate tax rate will increase during the life of the project. a. Would this increase the accounting break-even point? b. Would it increase the NPV break-even point? a. Would this increase the accounting break-even point? b. Would it increase the NPV break-even point?I've found out the EVA for each one as you can see but don't know how to calculate ROC. I think it's operating income/capital charge. Anyways I wanted to ask how I would solve part B which is telling me to examine. Can you tell me what you would do for B
- Two investors participate in an investment project and, after an analysis economic, the following results were obtained: • Investor A. TMAR: 13.45; NPV: 570,000. • Investor B. TMAR: 13:00; NPV: −2450. Explain the value of the results of investor B based on the recovery of your investment, profits and your minimum acceptable rate of return.I am considering two investment options that are not mutually exclusive. (This means that both of these options can be funded, one of them can be funded, or neither of them might be funded.)If my WACC is 5%, one investment option has a net present value of $20, and the other has a net present value of $50.If my WACC increases to 7%, the net present values then become $0 and $30. What should I do if my WACC is 5% now? What should I do if my WACC doubles to 10%? How does this change my decision?I was thinking about the topic B. What would be the answer : b. Ignoring tax, depreciation, and the time value of money, determine how long it will take to recover (pay back) the investment. It will takeenter your response hereyears.(Enter your response rounded to two decimal places.)
- Your brother wants to borrow $10,750 from you. He has offered to pay you back $12,250 in a year. If the cost of capital of this investment opportunity is 11%, what is its NPV? Should you undertake the investment opportunity? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. If the cost of capital of this investment opportunity is 11%, the NPV of the investment is $ (Round to the nearest cent.)Please answer both of the question. Exercise No. 1 Suppose they offer us an investment project in which we have to invest $5,000.00 and they promise us that after that investment we will receive $2,000.00 the first year and $4,000.00 the second year. Calculate internal rate of returnExercise No. 2 Suppose they offer us an investment project in which we have to invest $5,000.00 and they promise us that after that investment we will receive $1,000.00 the first year, $2,000.00 the second year, $1,500.00 the third year and $3,000.00 the fourth year. Calculate internal rate of returnGenerally, when NPV is negative or IRR isSEE MORE QUESTIONS