Business_taxation_solutions_week2

Business_taxation_solutions_week2 - Week 2 Assignment 1. a....

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Week 2 Assignment 1. a. $18,300 × .481 discount factor = $8,802 b. ($5,800 × .763 discount factor) + ($11,600 × .582 discount factor) = $11,176 c. $1,300 × 5.582 discount factor) = $7,257 d. ($40,000 × 2.531 discount factor) + ($65,000 × .708 discount factor) = $147,260 3. a. $6,200 $6,200 $(1,890) × .751 discount factor (1,419) $(4,000) × .621 discount factor (2,484 ) NPV $2,297 b. $(10,000) $(10,000) $(12,690) × .826 discount factor (10,482) $31,000 × .467 discount factor 14,477 NPV $(6,005 ) c. $20,000 $20,000 $(13,500) × .621 discount factor (8,384) $(7,500) × .386 discount factor (2,895 ) NPV $8,721 8. Year 0 Year 1 Year 2 Taxable income $9,100 $10,250 $15,300 Marginal tax rate .30 .30 .30 Tax $2,730 $3,075 $4,590 Revenue $13,000 $16,250 $23,400 Expenses (4,250) (8,000) (8,100) Tax cost (2,730 ) (3,075 ) (4,590 ) Net cash flow $6,020 $5,175 $10,710 Discount factor (6%) .943 .890 Present value $6,020 $4,880 $9,532 NPV $20,432 12. a. Year 0 Year 1 Year 2 Year 3
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Business_taxation_solutions_week2 - Week 2 Assignment 1. a....

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