Corporate Fin Focused Approach
5th Edition
ISBN: 9781285660516
Author: EHRHARDT
Publisher: Cengage
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A project will incur $700 in shutdown costs the
year after the completion of the project. The tax
rate is 35%. What is the tax shield resulting from
these tax-deductible shutdown costs (where a
negative number means a cash outflow and a
positive number means an incremental cash
inflow)?
A project will incur $700 in shutdown costs the year
after the completion of the project. The tax rate is 35%.
What is the tax shield resulting from these tax-
deductible shutdown costs (where a negative number
means a cash outflow and a positive number means an
incremental cash inflow)?
An investment of $83 generates after-tax cash flows of
$50.00 in Year 1, $72.00 in Year 2, and $125.00 in Year 3.
The required rate of return is 20 percent. Find the net
present value.
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