Mrs Biggs Invested in a Business That Will Generate the Following

question 79

Multiple Choice

Mrs. Biggs invested in a business that will generate the following cash flows over a three-year period. $$\begin{array} { | l | c | c | c | } \hline & \text { Year } 0 & \text { Year } 1 & \text { Year } ~ \\\hline \text { Taxeble revenue } & 30,000 & 45,000 & 70,000 \\\hline \text { Deductible expenses } & ( 15,000 ) & ( 15,000 ) & \text { (20,000) } \\\hline \text { Nandeductible expenses } & ( 1,000 ) & ( 4,000 ) & \text { (10,000) } \\\hline\end{array}$$ 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.

• A) $61,453
• B) $52,771
• C) $47,781
• D) None of the above

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Definitions:

Reaction

A process in which substances, called reactants, transform into different substances, called products.

Structure

The arrangement of atoms within a molecule that defines its chemical properties and reactivity.

Reaction

A method where reactants are converted into distinct substances known as products.

Organic Product(s)

Compounds containing carbon that are outcomes of chemical processes.