The nihilist Nikita is setting up a recording studio which will have an annual revenue of $80,000 and annual cost of $40,000. The studio will require an initial investment of $20,000. What is the net present value after two years of recording? Nikita's discount rate is 10%, and income tax in Riga, where he lives, is 40%. In the investment year, depreciation on all items is 50%, then 30% the following year, and 20% in the next year, which is the end of the schedule.

The nihilist Nikita is setting up a recording studio which will have an annual revenue of $80,000 and annual cost of $40,000. The studio will require an initial investment of $20,000. What is the net present value after two years of recording? Nikita's discount rate is 10%, and income tax in Riga, where he lives, is 40%. In the investment year, depreciation on all items is 50%, then 30% the following year, and 20% in the next year, which is the end of the schedule.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5EB: A grocery store is considering the purchase of a new refrigeration unit with an Initial Investment...

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