Calculate nominal after-tax net return

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Reference no: EM131923626

A farmer expects irrigation system will increase real operating receipts by $32,000 per year but will also increase real operating expenses by $8,000. Suppose that the inflation rate is 5% and the marginal tax rate is 20%.

(i) What is the nominal net return at the end of year 3?

a. $29,172 b. $22,800

c. $27,783 d. $24,000

(ii) Calculate the nominal after-tax net return at the end of year 4.

a. $28,800 b. $27,360

c. $34,560 d. $23,338

Reference no: EM131923626

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