PRINCIPLES OF TAXATION F/BUS.+INVEST.
22nd Edition
ISBN: 9781259917097
Author: Jones
Publisher: MCG
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Chapter 4, Problem 9AP
Company K has a 30 percent marginal tax rate and uses a 7 percent discount rate to compute
- a. If the before-tax cash flows represent taxable income in the year received, compute the NPV of the cash flows.
- b. Compute the NPV if Company K can defer the receipt of years 0 and 1 cash flows/income until year 2. (It would receive no cash in years 0 and 1 and would receive $57,000 cash in year 2.)
- c. Compute the NPV if Company K can
defer paying tax on years 0 and 1 cash flows until year 2. (It would receive $24,000 cash in year 2 but would pay tax on $57,000 income.)
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Chapter 4 Solutions
PRINCIPLES OF TAXATION F/BUS.+INVEST.
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