Answer:
PV(after-tax net return in 7th year) = 70.55 (Approx)
Explanation:
Given:
Number of year = 7
Pre-tax net returns (Fn) = $100
Growth rate = 4% = 0.04
Inflation = 3% = 0.03
Marginal tax rate = 30% = 0.3
Discount rate = 10% = 0.1
Computation:
Fn = Fo(1+g)ⁿ = 100(1.04)⁷
Fn = 131.6
Nominal net returns = 131.6(1.03)⁷
Nominal net returns = 161.85
After tax return = 161.85 (1 - 0.3)
After tax return = 113.30
After-tax, risk adjusted discount rate = 0.1(1-0.3) = 7%
PV(after-tax net return in 7th year) = 113.30
(1+0.07)⁻⁷
PV(after-tax net return in 7th year) = 70.55 (Approx)
Answer:
The correct answer is option B.
Explanation:
A monopolistic firm is characterized by a large number of buyers and sellers in the market producing differentiated products which are close substitutes, there are relatively easier entry and exit in the market.
In the given question, Teen Angle Hardware is looking for a niche or a slightly differentiated product to sell to teenagers. But is able to earn only a normal profit because there is a large number of firms in the market. And new firms can enter the market in the long run. So, this firm is an example of a monopolistic firm.
Answer: $400,000
Explanation:
Based on the information given in the question, Lisa's recognized gain or loss will be calculated as the difference between the amount that's realized and the adjusted basis. This will be:
Recognized gain will be:
= Amount realized - Adjusted basis
= $900,000 - $500,000
= $400,000
There's a recognized gain of $400,000
