Omega Corporation must choose between two business opportunities. The opportunities A and B will generate the following before-tax cash inflows and outflows. The cash inflows are fully taxable and the cash outflows are fully deductible. A B Year 0 $ (8,000) 6,000 Year 1 5,000 $ 5,000 Year 2 $ 20.000 $ 5.000 Omega uses a 7% discount rate to compute PV and has a 20% marginal tax rate over the 3 year period. Which opportunity should Omega choose? To receive credit, your answer must be supported by detailed calculations

Answer rating: 100% (QA)

To determine which opportunity Omega should choose we need to calculate the net present ... View the full answer