net_present_value - x PV annuity, or PV 1 PV annuity if an...

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Using net present value (NPV) to evaluate property transactions Present value of cash outflows: Amount PV Factor Tax rate Notes: Cash paid for new property (down payment) (cost) Tax on gain from sale of old property (gain) PV of 1 x Marginal tax rate PV annuity if installment sales method used. Tax on gain from sale of new property (gain) x PV of 1 x Marginal tax rate Tax on interest payment received (interest) PV annuity, or PV 1 Marginal tax rate PV of 1 if an installment note; otherwise PV annuity Tax on rental receipts (rent) x PV annuity x Marginal tax rate Present value of cash inflows or tax benefits: Sales proceeds (received today) selling price Principal payments received payment
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Unformatted text preview: x PV annuity, or PV 1 PV annuity if an installment note; otherwise PV of 1 Interest payments received interest x PV annuity due, or PV 1 PV of 1 if an installment note; otherwise PV annuity due Boot received boot Rental receipts rent x PV annuity due Tax savings on loss from sale of old property loss PV of 1 x Marginal tax rate Tax savings on loss from sale of new property loss x PV of 1 x Marginal tax rate Tax benefit from depreciation annual depreciation x PV annuity x Marginal tax rate Salvage value salvage x PV of 1 Total positive NPV = good project; (negative NPV) = loser PV annuity (ordinary) = payments made at end of year PV annuity due = payments made at beginning of year...
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This note was uploaded on 03/04/2010 for the course TAX 6845 taught by Professor Kelliher,c during the Fall '08 term at University of Central Florida.

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