1. Assume that the terminal value of an investment is $27,500. This purchase has a cost of $50,000 with a marginal tax rate of 13%. This investment has an annual depreciation of $4,000. What is the after-tax terminal value after 4 years?
$27,165
$29,145
$28,345
$26,365
2. Suppose that the marginal tax rate is 25%. If a farmer decides to purchase a new combine, it will increase the operating receipts $7,500 per year but it will cost $1,500 a year for maintenance. What is the annual after-tax return generated by this investment for each year?
$4,000
$4,500
$3,500
$5,000