Solutions to Chapter 9 Problems

The revenue stream is a five-year growing annuity. Pre-tax revenue in year 1 is found by multiplying the selling price ($3.15) by the number of units produced (1,000,000). The cash flows are growing at the nominal rate of 0.1025 and are discounted at 0.20. In order to find the after-tax present value, multiply revenues by (1-TC). ................
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