Given the following information:

Nominal Initial Cost $=$$$68,000$;

Nominal Before$-$tax Net Return $=$

$11,000$

Marginal Tax Rate $=20\%$; Required rate $of$ return $=12\%$

Real Terminal Value $=$$$60,000$; Investment Life $=3$ years

Inflation Rate $=4\%$; Risk Premium $=2\%$

Suppose that IRS will allow the investor to depreciate the investment using straight$-$line over $12$ years.

$($i$)$ What is the after$-$tax, risk adjusted discount rate?

a$.14\mathrm{.}4\%$

b$.11\mathrm{.}65\%$

c$.11\mathrm{.}2\%$

d$.13\mathrm{.}2\%$

Enter Response Here:

$($ii$)$ What is the nominal after$-$tax net return at the end of vear $2?$

What is the nominal after tax terminal value?

What is the present value of the nominal after tax terminal value?

What is the NPV of this investment?