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.

the answer is: c.that person might be arrested and deported

filling w-4 form incorrectly usually would rise suspicions from government's auditors. when they notice such mistakes, they would send their teams to investigate the situation further.

if those investigation teams believe that the incorrectness is done on purpose (with malicious intent), that person can be arrested or deported

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