Firm W, which has a 30 percent marginal tax rate, plans to operate a new...
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Firm W, which has a 30 percent marginal tax rate, plans to operate a new business that should generate $58,000 annual cash flow and ordinary income for three years (years 0,1 , and 2). Alternatively, Firm W could form a new taxable entity (Entity N) to operate the business. Entity N would pay tax on the three-year income stream at a 20 percent rate. The nondeductible cost of forming Entity N would be $6,800. Firm W uses a 5 percent discount rate. Use Appendix A and Appendix B. Required: a. Complete the below tables to calculate NPV. b. Should it operate the new business directly or form Entity N to operate the business? Complete this question by entering your answers in the tabs below. b. Should it operate the new business directly or form Entity N to operate the business? Complete this question by entering your answers in the tabs below. Complete the below tables to calculate NPV. Note: Cash outflows should be indicated by a minus sign. Round discount factors to 3 decimal places. Round intermediate calculations and final answers to the nearest whole dollar amount
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