EBK CORPORATE FINANCE
EBK CORPORATE FINANCE
4th Edition
ISBN: 8220103164535
Author: DeMarzo
Publisher: PEARSON
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Chapter 31, Problem 10P

a.

Summary Introduction

To determine: The present value of deferring the U.S. tax liability on TJ Ethiopian earnings for 10 years.

Introduction: The present value is an amount that an individual has to make as investment at present in order to generate the cash flow in the future. The present value of the cash flows can be computed by adding the cash flow of every stream.

b.

Summary Introduction

To determine: The exchange rate in 10 years that affects the actual amount of the U.S. tax liability and give the equation for the U.S. tax liability.

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$5,000 received each year for five years on the first day of each year if your investments pay 6 percent compounded annually. $5,000 received each quarter for five years on the first day of each quarter if your investments pay 6 percent compounded quarterly. Can you show me either by hand or using a financial calculator please.
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Now suppose Elijah offers a discount on subsequent rooms for each house, such that he charges $40 for his frist room, $35 for his second, and $25 for each room thereafter. Assume 30% of his clients have only one room cleaned, 25% have two rooms cleaned, 30% have three rooms cleaned, and the remaining 15% have four rooms cleaned.  How many houses will he have to clean before breaking even? If taxes are 25% of profits, how many rooms will he have to clean before making $15,000 profit?                           Answer the question by making a CVP worksheet similar to the depreciation sheets. Make sure it works well, uses cell references and functions/formulas when appropriate, and looks nice.
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