A company anticipates a taxable cash receipt of $50,000 in year 3 of a project.The company's tax rate is 30%,and its discount rate is 14%.What is the approximate present value of this future cash flow? Do not round your intermediate calculations and round the final answer to the nearest whole dollar.)

Question

Quizplus · Accepted Answer

To calculate the present value of the cash flow, we need to discount the future amount by the discount rate and subtract the taxes payable on the amount. The present value can be calculated as follows:
PV = $50,000 / (1 + 0.14) ^ 3 - 0.3 * $50,000
PV = $23,624. Therefore, the closest option is C: $23,624.

A Company Anticipates a Taxable Cash Receipt of $50,000 in Year