Suppose that the marginal tax rate is 25%. If a farmer decides to purchase a combine it will increase his revenue by $7,500 per year, but it will also increase his expenses by $1,500 per year. The before tax rate on this investment is 30%. The life of this investment is 10 years. What is the present value of the after tax net return

the present value of the after tax net return is $23,162.

Explanation:

Present day (discounted value) of net cash flows :

Net Cash flows = ( $7,500 - $1,500)

                         = $6,000

After tax Return = rate on this investment × (1 - tax rate)

                          = 0.30 × (1 - 0.25)

                          = 22.50 %

Number of Years = 10 years

Enter the Information in the financial calculator :

Pmt = $6,000, P/yr = 1, i = 22.50 %, N= 10 and Fv = 0

We get a Pv of $23,162.3137

Present Value is $23,162.

rational decision making is a multi-step process for making choices between alternatives. the process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. the word “rational” in this context does not mean sane or clear-headed as it does in the colloquial sense.

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if it is for a job, then you should learn everything you can about the job, like what does it involve, what qualification is required and how you are the right person for that job. dress appropriately for the interview. get plenty of rest the night before. good luck!