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Compute the increase in the npv of the transaction

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Problem 1: Bailey Inc. is planning a transaction that requires a $60,000 deductible cash expenditure. The transaction is structured so that Bailey will pay the cash and report the deduction this year (year 0). Use Appendix A of your textbook provided to compute the increase in the NPV of the transaction if it can be restructured so that Bailey will report the deduction this year, but pay the cash two years later (year 2). Bailey's marginal tax rate is 25%, and it uses a 9% discount rate to compute NPV.

Group of answer choices

Option 1: $8,677

Option 2: $9,014

Option 3: $9,480

Option 4: None of these choices are correct.

Reference no: EM132825448

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