Ms. Card bought an investment that will generate the following cash flows over a three-year period. $$\begin{array} { | l | c | c | c | }
\hline & \text { Year } 0 & \text { Year } 1 & \text { Year Z } \
\hline \text { Taxeble revenue } & 42,000 & 56,000 & 80,000 \
\hline \text { Nantexaeble revenue } & 6,000 & 8,500 & 9,000 \
\hline \text { Deductible exaesese } & \text { (20,000) } & \text { (20,000) } & \text { (25,000) } \
\hline
\end{array}$$ If Ms. Card's marginal tax rate over the three year period is 40% and she uses a 6% discount rate, compute the NPV of the transaction.

Question

Ms. Card bought an investment that will generate the following cash flows over a three-year period. $$\begin{array} { | l | c | c | c | } 
\hline & \text { Year } 0 & \text { Year } 1 & \text { Year Z } \
\hline \text { Taxeble revenue } & 42,000 & 56,000 & 80,000 \
\hline \text { Nantexaeble revenue } & 6,000 & 8,500 & 9,000 \
\hline \text { Deductible exaesese } & \text { (20,000) } & \text { (20,000) } & \text { (25,000) } \
\hline
\end{array}$$ If Ms. Card's marginal tax rate over the three year period is 40% and she uses a 6% discount rate, compute the NPV of the transaction.

Quizplus · Accepted Answer

The Answer of Ms. Card bought an investment that will generate the following cash flows over a three-year period. $$\begin{array} { | l | c | c | c | } 
\hline & \text { Year } 0 & \text { Year } 1 & \text { Year Z } \
\hline \text { Taxeble revenue } & 42,000 & 56,000 & 80,000 \
\hline \text { Nantexaeble revenue } & 6,000 & 8,500 & 9,000 \
\hline \text { Deductible exaesese } & \text { (20,000) } & \text { (20,000) } & \text { (25,000) } \
\hline
\end{array}$$ If Ms. Card's marginal tax rate over the three year period is 40% and she uses a 6% discount rate, compute the NPV of the transaction.

Ms Card Bought an Investment That Will Generate the Following