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1 points Save Answer An individual purchases a perpetuity providing payments of $330 at the end of each month, but with the first payment received immediately. If the interest rate on the perpetuity is 12% per annum compounded monthly, the purchase price of the perpetuity is $30,300 $30,000 O $33,000 O $33,330 Question 32 1 points Save Answer Question 33 A corporation is evaluating the relevant cash flows for a capital budgeting project (involving expansion of the firm's activities) and must estimate the terminal cash flow. The proposed machine will be disposed of at the end of its usable life of five years at an estimated sale price of $15,000. The machine has an original purchase price of $100,000, and will be depreciated using the prime cost (straight- line) method over its 5-year life. Net working capital is expected to decline by $5,000 at the end of the project. If the firm has a 40 per cent tax rate on ordinary income and long-term capital gains, the terminal cash flow is O $7,000 O $9,000 O $12,000 O $14,000 1 points Save Answer An individual purchases a perpetuity providing payments of $330 at the end of each month, but with the first payment received immediately. If the interest rate on the perpetuity is 12% per annum compounded monthly, the purchase price of the perpetuity is $30,300 $30,000 O $33,000 O $33,330 Question 32 1 points Save Answer Question 33 A corporation is evaluating the relevant cash flows for a capital budgeting project (involving expansion of the firm's activities) and must estimate the terminal cash flow. The proposed machine will be disposed of at the end of its usable life of five years at an estimated sale price of $15,000. The machine has an original purchase price of $100,000, and will be depreciated using the prime cost (straight- line) method over its 5-year life. Net working capital is expected to decline by $5,000 at the end of the project. If the firm has a 40 per cent tax rate on ordinary income and long-term capital gains, the terminal cash flow is O $7,000 O $9,000 O $12,000 O $14,000
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Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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