Spotted Potato is evaluating a project that would require the purchase of a piece of equipment for $496,000 today. During year 1, the project is expected to have relevant revenue of $405,000, relevant costs of $158,000, and relevant depreciation of $110000. Spotted Potato would need to borrow $496,000 today for the equipment and would need to make an interest payment of $28,000 to the bank in 1 year. Relevant operating cash flow for the project in year 1 is expected to be $192,000. What is the tax rate expected to be in year 1? O40.15% (plus or minus 3 bps) 14.94% (plus or minus 3 bps) 56.26% (plus or minus 3 bps) 19.71% (plus or minus 3 bps) O none of the answers are within 3 bps of the correct answer

Spotted Potato is evaluating a project that would require the purchase of a piece of equipment for $496,000 today. During year 1, the project is expected to have relevant revenue of $405,000, relevant costs of $158,000, and relevant depreciation of $110000. Spotted Potato would need to borrow $496,000 today for the equipment and would need to make an interest payment of $28,000 to the bank in 1 year. Relevant operating cash flow for the project in year 1 is expected to be $192,000. What is the tax rate expected to be in year 1? O40.15% (plus or minus 3 bps) 14.94% (plus or minus 3 bps) 56.26% (plus or minus 3 bps) 19.71% (plus or minus 3 bps) O none of the answers are within 3 bps of the correct answer

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 17P

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