Computing the Terminal-Year FCF: Babaloo Nightclubs Purchased a Disco Mirror

question 16

Multiple Choice

Computing the terminal-year FCF: Babaloo Nightclubs purchased a disco mirror that currently has a book value of $10,000. If Babaloo sells the disco mirror for $500 today, then what is the amount of cash that it will net after taxes if the firm is subject to a 39 percent marginal tax rate?

• A) $500
• B) $3,705
• C) $4,205
• D) $9,500

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