An investor wants to do capital budgeting for his new investment project. He has the following information: IRS will allow the investor to depreciate the investment using straight-line over 10 years. The marginal tax rate will be 20% over the next 5 years & it will be 15% from the 6th to the 10th year. The investor expects that the terminal value for the investment is $40,000 at the end of 6 years.(a 6-year project) What is the after-tax terminal value of this investment if the initial cost is $60,000?
$39,200
$36,800
$37,600
$38,400
None of the Answers
