Given the following information: Nominal Initial Cost = $30,000;

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Given the following information:

Nominal Initial Cost = $30,000; Nominal Before-tax Net Return = $8,000

Marginal Tax Rate = 10%; Required rate of return = 10%

Real Terminal Value = $0; Investment Life = 5 years

Suppose that IRS will allow the investor to depreciate the investment using straight-line over 15 years and the inflation rate is 4%.

(i) What is the nominal terminal value?

a. $0 b. $30,000

c. $31,000 d. $27,000

Enter response here:

(ii) What is the annual depreciation expense?

a. $2,000 b. $2,080

c. $6,000 d. $6,240

Enter response here:

(iii) What is the nominal after-tax terminal value?

a. $2,000 b. $2,900

c. $2,100 d. $2,700

Related Book For answer-question

Project Management A Managerial Approach

ISBN: 978-0470533024

8th edition

Authors: Jack R. Meredith, Samuel J. Mantel Jr.

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Posted Date: Jul 08, 2021 02:38 AM

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Given the following information: Nominal Initial Cost = $30,000;

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Project Management A Managerial Approach

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