Java Cafe’s tax rate is 45 percent and the appropriate discount rate is 8 percent. It is considering another project. Each asset class consists only of the project asset and will be terminated at the end of the project. Java Cafe is not capital constrained. The initial investment is $85,000; annual pre-tax operating cash flow is $32,500; salvage value is $65,000; the CCA rate is 30 percent; and the length of the project is six years. Should Java Cafe take this project?
Answer to relevant QuestionsKRZ Company has hired you to help evaluate several projects. The firm’s tax rate is 40 percent and the appropriate discount rate is 10 percent. Each asset class is small and will be terminated at the end of each project. ...Describe how CCA recapture and CCA terminal losses occur and their tax treatment.Repeat Practice Problem 41 assuming that the project would generate annual revenue of $70,000 and annual costs of $40,000 for six years. Also, assume the asset class will remain open.GG Inc. has a project that requires ...AK Radio has hired a consultant to help in the assessment of a project to launch a satellite to deliver a 24/7 infomercial radio station to the world. The satellite costs $500 million and has a CCA rate of 35 percent. The ...1. Which of the following is not one of the three types of merger?a. Vertical M&Ab. Horizontal M&Ac. Proxy contestd. Conglomerate2. Which of the following M & As is valid?a. VA − T = $400,000; VA = $200,000; VT = ...
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