Chapter 20, Problem 9P

a.

Summary Introduction

To calculate: The value of before-tax profit, taxes and after-tax profit of Excel Systems, if interest is sold to Folsom Corp.

Introduction:

Tax:

It is the amount that an individual is obliged to pay to the government from their income or profit.

After-tax benefits:

After-tax benefits are deductions for which the individuals are eligible after the calculation of income tax.

b.

Summary Introduction

To calculate: The value of before-tax profit, taxes and after-tax profit of Excel Systems.

Introduction:

Tax:

It is the amount that an individual is obliged to pay to the government from their income or profit.

After-tax benefits:

After-tax benefits are deductions for which the individuals are eligible after the calculation of income tax.

c.

Summary Introduction

To calculate: The after-tax profit by using 9 percent discount rate for Excel Systems and compare it with the answer computed in part (a).

Introduction:

After-tax benefits:

After-tax benefits are deductions for which the individuals are eligible after the calculation of income tax.