1. At the start of a project, a firm assumed that a machine would be sold at the end of the project at 20 million. The firm used straight-line depreciation method based on the book value of 20 million at the end of the project for the machine. However, at the end of the project the machine is sold for 11 million instead. If marginal tax rate is 40%, then the firm will
A) Recieve 4.40 million from the IRS, since the taxes were overpaid
B) Pay additional taxes of 8 million, since the taxes were underpaid
C) Pay additional taxes of 4.4 million, since the taxes were underpaid
D) Have 14.60 million in after-tax proceeds from the sale of the machine
E) Have 9 million in after-tax proceeds from the sale of the machine?
2. What is the present value of of the following cash flows at an interest rate of 10% per year?
a. $100 received 5 years from now?
b. $100 received 60 years from now?
c. $100 received each year beginning one year from now and ending 10 years from now?
d. $100 received each year for 10 years beginning now?
e. $100 each year beginning one year from now and continuing forever (no need financial keys, just common sense)