Economics 2163A/B Chapter Notes - Chapter 1-5: Dan Friedman (Graphic Designer), Distilled Beverage, State Income Tax
10 Jan 2013
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Questions: delta software earned million this year. Suppose the growth rate of delta"s profits and the interest rate are both constant and delta will be in business forever. You are a strong advocate for a one-year investment project that would cost your firm ,000 today, but generate virtually certain earnings of ,000 at year-end. Those in your firm"s financial group concur that the investment is virtually risk- free, but nonetheless your boss is concerned about the firm"s cash flow problems. In fact, the problems are so severe that the firm"s bank currently charges it 20 percent on one-year loans. Based on tax considerations, your accounting department suggests that atlantic city is the best choice, followed closely by las vegas. In particular, your current year tax savings from locating in atlantic city are million but only million in las vegas. It will cost million to build the hotel in either location.
