1. At the end of a tax year, a company has the following data:

Gross receipts (sales) $300,000

Cost of goods sold $50,000

Tax depreciation $15,000

Book depreciation $8,000

Interest on debt $10,000

What is the company’s tax liability (tax) and effective tax rate?

2. For the net cash flows given below, determine the following

(a) The net present value if MARR equals 20%.

(b) The internal rate of return.

(c) The payback period.

End of Year Net Cash Flow

0 -20,000

1 -20,000

2 -20,000

3 -20,000

4 40,000

5 20,000

6 10,000

7 20,000

8 20,000

9 20,000

10 20,000