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Crispen corporation can invest in a project that costs

Question - Crispen Corporation can invest in a project that costs $400,000. The project is expected to have an after-tax return of $250,000 in each of years 1 and 2. Crispen normally uses a 10 percent discount rate to evaluate projects but feels it should use 12 percent to compensate for inflation. How much difference does the rate make in the after-tax net present value of the project?

a. $50,000

b. $22,500

c. $20,000

d. $11,250

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Accounting Basics: Crispen corporation can invest in a project that costs

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