Friday, 15 November 2019

Firm Q is about to engage in a transaction with the following cash flows over a three-year period. Use

Firm Q is about to engage in a transaction with the following cash flows over a three-year period. Use Appendix A and Appendix B. Year 0 Year 1 Year 2 Taxable revenue $ 21,700 $ 21,900 $ 25,400 Deductible expenses (6,100 ) (6,400 ) (9,500 ) Nondeductible expenses (770 ) (1,300 ) 0 If the firm’s marginal tax rate over the three-year period is 30 percent and its discount rate is 6 percent, compute the NPV of the transaction. (Expenses and cash outflows should be indicated by a minus sign. Round discount factor(s) to 3 decimal places and your intermediate calculations to the nearest whole dollar amount.)

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