Jan is choosing between three alternative investments, each of which will require a $100,000 initial outlay.
Determine the present value of the after-tax cash flows from the three investments described below.
Assume the following in your computations:
- Jan is in the 24% marginal bracket; Long-Term Capital Gains rate is 15%;
- All tax payments occur at the end of the year;
- 4% discount rate (present value interest factors are below).
year 2 0.925
year 3 0.889
Investment C is a stock investment that is expected to be sold at the end of 3 years for $120,000. ( the answer is $4,013, but can you show the work)
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