The nihilist Jokubas is setting up a recording studio which will have an annual revenue of $80,000 and annual cost of $30,000. The studio will require an initial investment of $10,000. What is the net present value after two years of recording? Jokubas's discount rate is 10%, and income tax in Riga, where he lives, is 20%. In the investment year, depreciation on all items is 20%, then 50% the following year, and 30% in the next year, which is the end of the schedule. A. $76,800 B. $101,400 C. $61,200 D. $62,100

The nihilist Jokubas is setting up a recording studio which will have an annual revenue of $80,000 and annual cost of $30,000. The studio will require an initial investment of $10,000. What is the net present value after two years of recording? Jokubas's discount rate is 10%, and income tax in Riga, where he lives, is 20%. In the investment year, depreciation on all items is 20%, then 50% the following year, and 30% in the next year, which is the end of the schedule. A. $76,800 B. $101,400 C. $61,200 D. $62,100

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 3EA: If a copy center is considering the purchase of a new copy machine with an initial investment cost...

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