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In year 1, what revenue should Northeast Bottlers use in its analysis of the Boston project, which involves expanding into Boston, if today is time 0 and sales in Boston would be $200000; sales in New York would be $20000 lower with the Boston project than without it; and sales in Philly would be $20000 higher with the Boston project than without it.

In year 1, what revenue should Northeast Bottlers use in its analysis of the Boston project, which involves expanding into Boston, if today is time 0 and sales in Boston would be $200000; sales in New York would be $20000 lower with the Boston project than without it; and sales in Philly would be $20000 higher with the Boston project than without it.

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 year 1, what revenue should Northeast Bottlers use in its analysis of the Boston project, which involves expanding into Boston, if today is time 0 and sales in Boston would be $200000; sales in New York would be $20000 lower with the Boston project than without it; and sales in Philly would be $20000 higher with the Boston project than without it.
Transcribed Image Text:In year 1, what revenue should Northeast Bottlers use in its analysis of the Boston project, which involves expanding into Boston, if today is time 0 and sales in Boston would be $200000; sales in New York would be $20000 lower with the Boston project than without it; and sales in Philly would be $20000 higher with the Boston project than without it.
XYZ is evaluating a project that would require the purchase of a piece of equipment for $580,000 today. During year 1, the project is expected to have relevant revenue of $756,000, relevant costs of $199,000, and relevant depreciation of $136,000. XYZ would need to borrow $580,000 today to pay for the equipment and would need to make an interest payment of $30,000 to the bank in 1 year. Relevant net income for the project in year 1 is expected to be $322,000. What is the tax rate expected to be in year 1? A rate equal to or greater than 19.95% but less than 24.42% A rate equal to or greater than 28.03% but less than 37.53% A rate equal to or greater than 37.53% but less than 51.10% A rate equal to or greater than 24.42% but less than 28.03% A rate less than 19.95% or a rate greater than 51.10%
Transcribed Image Text:XYZ is evaluating a project that would require the purchase of a piece of equipment for $580,000 today. During year 1, the project is expected to have relevant revenue of $756,000, relevant costs of $199,000, and relevant depreciation of $136,000. XYZ would need to borrow $580,000 today to pay for the equipment and would need to make an interest payment of $30,000 to the bank in 1 year. Relevant net income for the project in year 1 is expected to be $322,000. What is the tax rate expected to be in year 1? A rate equal to or greater than 19.95% but less than 24.42% A rate equal to or greater than 28.03% but less than 37.53% A rate equal to or greater than 37.53% but less than 51.10% A rate equal to or greater than 24.42% but less than 28.03% A rate less than 19.95% or a rate greater than 51.10%
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