What is the after-tax terminal value after four years

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Reference no: EM131916312

1. Assume that the terminal value of an investment is $27,500. This purchase has a cost of $50,000 with a marginal tax rate of 13%. This investment has an annual depreciation of $4,000. What is the after-tax terminal value after 4 years?

$27,165

$29,145

$28,345

$26,365

2. Suppose that the marginal tax rate is 25%. If a farmer decides to purchase a new combine, it will increase the operating receipts $7,500 per year but it will cost $1,500 a year for maintenance. What is the annual after-tax return generated by this investment for each year?

$4,000

$4,500

$3,500

$5,000

Reference no: EM131916312

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