Initial cost = $75,200
Salvage value = $21,000
Useful life (N) = 6
Annual operating costs = $6,800
Extra annual income taxes = $2,400
Determine the net present value:
[tex]\\$ N P V_A=-($ Operating costs $+$ Income taxes $) \times \frac{1-(1+I)^{-N}} ${I}+\frac{\text { Salvage }}{(1+I)^N}-$ Initial costs \\$N P V_A=-(\$ 6,800+\$ 2,400) \times \frac{1-(1+13 \%)^{-6}}{13 \%}+\frac{\$ 21,000}{(1+13 \%)^6}-75,200$\\N P V_A=-\$ 101,890.77$[/tex]
The Net Present Value : -$101,890.77
The term "income tax" refers to a type of tax imposed by governments on income earned by businesses and individuals under their jurisdiction. According to the law, a taxpayer must file an annual income tax return to determine his tax liability. Income tax is a source of government revenue. Income tax is a tax levied on income or profits received by an individual or company. Income tax is usually calculated as the tax rate multiplied by taxable income. Tax rates may vary according to the type or characteristics of the taxpayer and the type of income
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