A firm will have before tax cash flows

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Reference no: EM131241318

1. Assume a 20% corporate income tax. Does a project that returns 16% before-tax have a negative NPV if it costs $100 today and if the appropriate after-tax cost of capital is 11%?

2. A firm will have before-tax cash flows of $3 million. It can invest in equally risky cash flows that earn a before-tax expected rate of return of 14%. What assumption do you have to make to allow yourself to work with before-tax present values?

Reference no: EM131241318

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