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year 1=450,000 YEAR 2= 350,000 year 3= 275,000 year 4 =200,000 the general manag

ID: 1246691 • Letter: Y

Question

year 1=450,000 YEAR 2= 350,000 year 3= 275,000 year 4 =200,000 the general manager has been told by the owners of the team that any capital expenditures must yield at least 12 percent after taxes. the firm's marginal income tax rate is 40 percent. furthermore, a check of the tax regulation indicates that the team can depreciate the $800,000 initial expenditure over the four year period.(a) calculate the internal rate of return and the net present value to determine the desirability of this investment. (b) should the bobcats sign the superstars?

Explanation / Answer

web3.holyfamily.edu/cjiang/finc403/06.ppt