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In 6 years, Hopkins Company plans to receive $9,400 cash from the sale of a machine that has a $5,000 book value. FV of $1 at FV of an ordinary PV of $1 at PV of an ordinary annuity at 78 annuity at 78 Year 1 2 3 4 5 6 78 1.070 1.145 1.225 1.311 1.403 1.501 1.000 2.070 3.215 4.440 5.751 7.153 7% 0.935 0.873 0.816 0.763 0.713 0.666 0.935 1.808 2.624 3.387 4.100 4.767 If the firm is subject to a 30% income tax rate and has a(n) 7% after-tax hurdle rate, the correct discounted net cash flow would be:

In 6 years, Hopkins Company plans to receive $9,400 cash from the sale of a machine that has a $5,000 book value. FV of $1 at FV of an ordinary PV of $1 at PV of an ordinary annuity at 78 annuity at 78 Year 1 2 3 4 5 6 78 1.070 1.145 1.225 1.311 1.403 1.501 1.000 2.070 3.215 4.440 5.751 7.153 7% 0.935 0.873 0.816 0.763 0.713 0.666 0.935 1.808 2.624 3.387 4.100 4.767 If the firm is subject to a 30% income tax rate and has a(n) 7% after-tax hurdle rate, the correct discounted net cash flow would be:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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In 6 years, Hopkins Company plans to receive $9,400 cash from the sale of a machine that has a $5,000 book value. FV of $1 at FV of an ordinary PV of $1 at PV of an ordinary 78 annuity at 7% 7% annuity at 78 1.070 0.935 1.145 0.873 0.816 0.763 0.713 0.666 Year 1 2 3 4 5 6 O 1.225 1.311 Multiple Choice O 1.403 1.501 O If the firm is subject to a 30% income tax rate and has a(n) 7% after-tax hurdle rate, the correct discounted net cash flow would be: $5,381. $8,080. 1.000 2.070 3.215 4.440 None of the other answers is correct. $6,705. 5.751 7.153 $10,720, 0.935 1.808 2.624 3.387 4.100 4.767
Transcribed Image Text:In 6 years, Hopkins Company plans to receive $9,400 cash from the sale of a machine that has a $5,000 book value. FV of $1 at FV of an ordinary PV of $1 at PV of an ordinary 78 annuity at 7% 7% annuity at 78 1.070 0.935 1.145 0.873 0.816 0.763 0.713 0.666 Year 1 2 3 4 5 6 O 1.225 1.311 Multiple Choice O 1.403 1.501 O If the firm is subject to a 30% income tax rate and has a(n) 7% after-tax hurdle rate, the correct discounted net cash flow would be: $5,381. $8,080. 1.000 2.070 3.215 4.440 None of the other answers is correct. $6,705. 5.751 7.153 $10,720, 0.935 1.808 2.624 3.387 4.100 4.767
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