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What is the before-tax rate of return

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Reference no: EM132783257

Question - A corporation with a 27% combined income tax rate is considering the following investment in research equipment.

Year Before-Tax Cash Flow

0 -7500,000

1 650,000

2 950,000

3 2,750,000

4 1,900,000

5 800,000

6 450,000

Required - Prepare an after-tax cash flow table assuming MACRS depreciation.

(a) What is the before-tax rate of return?

(b) What is the after-tax rate of return?

Reference no: EM132783257

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