Suppose an investment has a life of 3 years, an after-tax discount rate of 10%, and an after-tax terminal value of $60,800. The present value of the after-tax terminal value is $60,800.
a) The initial investment cost is $60,800.
b) The after-tax terminal value should be discounted further to find its present value.
c) The after-tax discount rate for this investment is 3.33% per annum.
d) The investment's present value of cash flows for the first three years is $60,800.