How did the the answer found $58,667 in the question when deriving $255,512.38? The...
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Accounting
How did the the answer found $58,667 in the question when deriving $255,512.38?
The project is depreciated using the straight-line method with no salvage value. The company's cost of capital is 10% and the effective income tax rate is 30%. If the effective income tax rate increases to 40%, the company should A. Reject the project since the annual after-tax cash flows are reduced. B. Accept the project since the depreciation deduction after taxes increases. C. Reject the project since IRR decreases. D. Accept the project since the after-tax discounted cash inflows exceed the cash outflows. Answer (D) is correct. Even with the higher tax rate, the IRR and NPV are still acceptable. The discounted cash flow of $255,512.38($58,6674.3553) is greater than the $250,000 initial cost
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