The firm is in the 30% income tax bracket and uses double-declining-balance (DDB) depreciation with no salvage value. Given a four-year life, the DDB depreciation rate is 50% (i.e., 2 x 25% ). In year four, record depreciation expense as the net book value (NBV) of the asset at the start of the year. (Round discount factor to 3 decimal places and other answers to the nearest whole dollar amount. Negative amounts should be indicated by a minus sign.) Year 0 1 2 3 4 Pre-Tax Cash Inflows $ (60,000) 32,000✔ 32,000 32,000 32,000 Depreciation Taxable Expense Income S S 0 30,000 2,000 15,000✔ 17,000✔ 7,500✔ 24,500 7,500✔ 24,500 Income Taxes 0$ 0 600✔ 5,100 7,350 7,350 After-tax Net Cash Inflow S (60,000) ✔ 31,400 26,900 24,650 24,650 Net present value (NPV) = Discount Factor 0.000 S 0.909 X 0.826 X 0.751 X 0.683 S Present Values (60,000) (60,000) Show less

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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I need help with the discount factor.  The numbers for 10% on the chart do not work as you can see in the picture.  Thank you.

Complete this question by entering your answers in the tabs below.
Req 1A
Year
0
1
2
3
4
Req 1B
The firm is in the 30% income tax bracket and uses double-declining-balance (DDB) depreciation with no salvage value. Given
a four-year life, the DDB depreciation rate is 50% ( i.e., 2 x 25% ). In year four, record depreciation expense as the net book
value (NBV) of the asset at the start of the year. (Round discount factor to 3 decimal places and other answers to the nearest
whole dollar amount. Negative amounts should be indicated by a minus sign.)
Pre-Tax
Cash
Inflows
$ (60,000)
32,000✔
32,000
32,000
32,000
Req 1C
S
Depreciation Taxable Income
Expense
Taxes
Income
Req 2
0✔ S
30,000
15,000✔
7,500
7,500
$
0 S
0
2,000
17,000✔
5,100
24,500✔ 7,350
24,500✔ 7,350
After-tax
Net Cash
Inflow
600✔
Discount
Factor
0.000 S
0.909 X
0.826 X
0.751
0.683 x
(60,000)✔
31,400
26,900
24,650✔
24,650
Net present value (NPV) =
S
Present
Values
(60,000)
(60,000)
Show less
Transcribed Image Text:Complete this question by entering your answers in the tabs below. Req 1A Year 0 1 2 3 4 Req 1B The firm is in the 30% income tax bracket and uses double-declining-balance (DDB) depreciation with no salvage value. Given a four-year life, the DDB depreciation rate is 50% ( i.e., 2 x 25% ). In year four, record depreciation expense as the net book value (NBV) of the asset at the start of the year. (Round discount factor to 3 decimal places and other answers to the nearest whole dollar amount. Negative amounts should be indicated by a minus sign.) Pre-Tax Cash Inflows $ (60,000) 32,000✔ 32,000 32,000 32,000 Req 1C S Depreciation Taxable Income Expense Taxes Income Req 2 0✔ S 30,000 15,000✔ 7,500 7,500 $ 0 S 0 2,000 17,000✔ 5,100 24,500✔ 7,350 24,500✔ 7,350 After-tax Net Cash Inflow 600✔ Discount Factor 0.000 S 0.909 X 0.826 X 0.751 0.683 x (60,000)✔ 31,400 26,900 24,650✔ 24,650 Net present value (NPV) = S Present Values (60,000) (60,000) Show less
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