J&J Electric Company expects to have taxable income of $320.000 from itsregular business over the next two years. The company is considering a new residential wiring project for a proposed apartment complex during year 0. This two-year project requires the purchase of new equipment for $30.000. ·me equipment falls into the MACRS five-year class. The equipment will be sold after two years for $12,000. The project will bring in additional revenue of$ I 00,000 each year, but it is expected to incur an additional operating cost of $40,000 each year. What is the income tax rate to use in the year I for this project evaluation?(a) 39%(b) 34%(c) 33.77%(cl) 35.39%

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.