Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Novak Company would like to start a new venture. The company is currently in the 24%
marginal tax bracket and uses a 4% discount factor. The company projects that the venture
will produce before-tax cash flows of $9,000 in Year 0, $20,000 in Year 1, and $33,000 in Year
2.
(a)
If taxable income and the before-tax cash flows are equal in the year received, compute
the present value of the cash flows. (Round present value factor calculations to 3 decimal
places, e.g. 1.251 and final answer to O decimal places, e.g. 58,971.)
Present value
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Transcribed Image Text:Novak Company would like to start a new venture. The company is currently in the 24% marginal tax bracket and uses a 4% discount factor. The company projects that the venture will produce before-tax cash flows of $9,000 in Year 0, $20,000 in Year 1, and $33,000 in Year 2. (a) If taxable income and the before-tax cash flows are equal in the year received, compute the present value of the cash flows. (Round present value factor calculations to 3 decimal places, e.g. 1.251 and final answer to O decimal places, e.g. 58,971.) Present value
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