Pertinent information for two alternatives A and B is shown below. If i=10% / year and the effective income tax rate is 40%, answer the following true/false questions. True Alt. A 200,000 40,000 Basis, $ CFBT, $ MACRS Recovery, Years 5 Salvage Value, $ Useful Life, Years The CFAT at the end of year 7 for Alt. B is greater than $50,000. False 20,000 Alt.B 300,000 50,000 6 5 30,000 7

Pertinent information for two alternatives A and B is shown below. If i=10% / year and the effective income tax rate is 40%, answer the following true/false questions. True Alt. A 200,000 40,000 Basis, $ CFBT, $ MACRS Recovery, Years 5 Salvage Value, $ Useful Life, Years The CFAT at the end of year 7 for Alt. B is greater than $50,000. False 20,000 Alt.B 300,000 50,000 6 5 30,000 7

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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Consider the streams of income given in the following table: a. Find the present value of each income stream, using a discount rate of 4%, then repeat those calculations using a discount rate of 8%. b. Compare the calculated present values and discuss them in light of the fact that the undiscounted total income amounts to $14,000 in each case. a. The present value of income stream A. using a discount rate of 4% is §. (Round to the nearest cent) Data table Income Stream End of Year A $5,000 $4,000 $3,000 $2,000 $2,000 $3,000 1 $4,000 4 $5,000 Total $14,000 $14,000 (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Clear all Check answer Help r
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