Mr. a, who has a 35 percent marginal tax rate, must decide between two investment opportunities, both of which require a $50,000 initial cash outlay in year 0. investment 1 will yield $8,000 before tax cash flows in years 1, 2, and 3. this cash represents ordinary taxable income. in year 3, mr. a can liquidate the investment and recover his $50,000 cash outlay. he must pay a nondeductible $200 annual fee (in years 1, 2, and 3) to maintain investment 1. investment 2 will not yield any before-tax cash flow during the period over which mr. a will hold the investment. in year 3, he can sell investment 2 for $75,000 cash. his $25,000 profit on the sale will be capital gain taxed at 15 percent. assuming a 6 percent discount rate, determine which investment has the greater npv
Answers: 3
Business, 22.06.2019 06:00
Cash flow is often a problem for small businesses. how can an entrepreneur increase cash flow? a) locate lower-priced suppliers. b) forego sending in estimated tax payments to the irs c) shorten the terms on a bank loan to pay it off more quickly d) sell more low-margin items.
Answers: 1
Business, 22.06.2019 10:30
Perez, inc., applies the equity method for its 25 percent investment in senior, inc. during 2018, perez sold goods with a 40 percent gross profit to senior, which sold all of these goods in 2018. how should perez report the effect of the intra-entity sale on its 2018 income statement?
Answers: 2
Business, 22.06.2019 12:40
When cell phones were first entering the market, they were relatively large and reception was undependable. all cell phones were essentially the same. but as the technology developed, many competitors entered, introducing features unique to their phones. today, cell phones are only a small fraction of the size and weight of their predecessors. consumers can buy cell phones with color screens, cameras, internet access, daily planners, or voice activation (and any combination of these features). the history of the cell phone demonstrates what marketing trend?
Answers: 3
Business, 22.06.2019 20:00
Double corporation acquired all of the common stock of simple company for
Answers: 1
Mr. a, who has a 35 percent marginal tax rate, must decide between two investment opportunities, bot...
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