Question

Firm X has the opportunity to invest $200,000 in a new venture. The projected cash flows from the venture are as follows.
Firm X uses an 8 percent discount rate to compute NPV, and its marginal tax rate over the life of the venture will be 35 percent. Determine if Firm X should make the investment, assuming that:
a. The revenues are taxable income, and the expenses are deductible.
b. The revenues are taxable income, but the expenses are nondeductible.


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  • CreatedNovember 03, 2015
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