“We don’t want individual plant managers to get involvedin the firm’s tax p?

Question

Discuss the following statement: “We don’t want individual plant managers to get involved

in the firm’s tax position. So instead of telling them to discount after-tax cash

flows at 10 percent, we just tell them to take the pretax cash flows and discount at 15

percent. With a 35 percent tax rate, 15 percent pretax generates approximately 10 percent

after tax.”

Answer 1

It means just run the plant and leave everything else to the accountants.