What is a lease? A A contract outlining the terms under which a landlord agrees to rent property to a tenant B A loan from a ban
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Answer:
net present value = 133808.82
Explanation:
solution
we find here present value of cash inflows that is
Cash inflows = $325,000
and
cash costs @63% = $204,750
so
cash flow before tax = 325,000 - 204,750 = $120,250
and Tax @21% = $25,252.5
so
Cash flow after tax will be = $120,250 - $25,252.5 = $94,997.5
Discounting factor is = 0.17
Present value of cash inflows = (cash flows after tax ÷ discounting factor)
Present value of cash inflows =
Present value of cash inflows = $558808.82
so
net present value = Present value of cash inflow - present value of cash outflows
put here
net present value = $558808.82 - $425,000
net present value = 133808.82