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    Opportunity Yawl NPV

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    Yawl Inc. must choose between two business opportunities. Opportunity 1 will generate $40,000 before-tax cash flow in years 0, 1 and 2, with a $7,000 annual tax cost. Opportunity 2 will also generate $40,000 before-tax cash flow in years 0, 1 and 2. However, the tax cost will be $15,000 in year 0, $2,500 in year 1 and $2,500 in year 2.

    Which opportunity should Yawl choose if it uses a 6% discount rate to compute NPV?

    © BrainMass Inc. brainmass.com May 20, 2020, 5:40 pm ad1c9bdddf
    https://brainmass.com/business/discounted-cash-flows-model/opportunity-yawl-npv-236232

    Solution Preview

    Yawl Inc. must choose between two business opportunities. Opportunity 1 will generate $40,000 before-tax cash flow in years 0, 1 and 2, with a ...

    Solution Summary

    The solution determines which opportunity Yawl should choose if its uses a 6% discount rate to compute NPV. The tax cost is given.

    $2.19

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