Wedge Corporation uses a discount rate of 14% and has a tax rate of 30%. The fol

Question

Wedge Corporation uses a discount rate of 14% and has a tax rate of 30%. The following cash flows occur in the last year of a 10-year equipment selection investment project:

Cost savings for the year = $180,000
Working capital released = $120,000
Salvage value of equipment = $25,000


At the end of the ten years when the equipment is sold, its net book value for tax purposes is zero. The total after-tax present value of the cash flows above is closest to:
$45,765
$48,465
$61,425
$71,145

annuity rate is 5.216 if needed please show work

Explanation / Answer

D) $71,145

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