Global industries (GI) is planning to use some existing equipment from its own facilities in a foreign project. The used equipme
nt has a book value of $2 million but a market value of $6 million. If GI's marginal tax rate is 34%, what is its opportunity cost of using the used equipment in the foreign project?
a) $2 million
b) $3.25 million
c) $6 million
d) $4.64 million
a) $2 million
b) $3.25 million
c) $6 million
d) $4.64 million
1 answer:
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Answer:
present value = $785.21
Explanation:
given data
interest rate r = 5%
Year 1 Cash Flow C1 = $190
Year 2 Cash Flow C2 = $390
Year 3 Cash Flow C3 = $290
time t = 3 year
solution
we get here present value of cash-flow stream that is express as
present value = ......................1
put here value and we get
present value =
present value = $785.21