Mrs Biggs Invested in a Business That Will Generate the Following

question 30

Multiple Choice

Mrs. Biggs invested in a business that will generate the following cash flows over a three-year period. $\begin{array}{lccc}& \text { Year } 0 & \text { Year } & \text { Year 2 } \\\text { Taxable revenue } & 30,000 & 45,000 & 70,000 \\\text { Deductible expenses } & (15,000) & (15,000) & (20,000) \\\text { Nondeductible expenses } & (1,000) & (4,000) & (10,000) \end{array}$
If Mrs. Biggs' marginal tax rate over the three-year period is 30% and she uses a 6% discount rate, compute the NPV of the transaction using the appropriate present value tables in Appendix A.

• A) $61,453
• B) $52,771
• C) $47,781
• D) None of these choices are correct.

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Definitions:

Constructive Conflict

A type of conflict that leads to positive outcomes, encouraging growth and improvement.

Satisficing

A decision-making strategy that aims for a satisfactory or adequate result, rather than the optimal solution, particularly when dealing with complex problems.

Scenario Planning

Scenario planning is a strategic planning method that organizations use to envision and prepare for various future possibilities.

Satisficing

A decision-making strategy that aims for a satisfactory rather than optimal solution by prioritizing the first option that meets a given threshold of acceptability.