Internal Revenue Service Assignment

Given the subsequent information:

Nominal Preliminary Worth = $30,000;       Nominal Sooner than-tax Net Return = $eight,000

Marginal Tax Cost = 10%;               Required cost of return = 10%

Precise Terminal Value = $zero;                Funding Life = 5 years

Suppose that IRS will allow the investor to depreciate the funding using straight-line over 15 years and the inflation cost is 4%.

(i) What is the nominal terminal value?

a.         $zero                                b.         $30,000

c.          $31,000                      d.         $27,000

Enter response proper right here:


(ii) What is the annual depreciation expense?

a.         $2,000                                    b.         $2,080

c.          $6,000                                    d.         $6,240

Enter response proper right here:

(iii) What is the nominal after-tax terminal value?

a.         $2,000                                    b.         $2,900

c.          $2,100                                    d.         $2,700

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