2 MotoSport is buying an asset that costs $730,000 and can be depreciated at 20 percent per year (Class 8) over its eight-year life. The asset is to be used in a three-year project at th end of the project, the asset can be sold for $740,200. The company faces a tax rate of 26% The sale of this asset will close the asset class. The from the sale of asset is eBook Multiple Choice Capital gain, $10,200 Capital gain, $319,720 Terminal loss, $10,200 Terminal loss, $319,720 Capital gain: $11,583

A new machine costs $798,410 and falls in a 26.50% CCA class.  The machine will have zero value after 5 years of use but will save $370,940 annually in operating costs before taxes in those five years.  Assume a tax rate of 32.73%.  Using a required return of 13.67%, what is the NPV of the machine purchase? Options $210,082 $215,760 $221,437 $227,115 $232,793

1. CB Electronix needs to expand its plant. It is considering an alternative plan that will last indefinitely. The MARR is 15%. Please determine the capitalized cost of the alternative. Alternative: Expand by 20 000 square feet First cost = $2 000 000 Annual Maintenance costs = $10 000 per year starting in year 3 Periodic maintenance costs = $15 000 every 15 years, starting in 20 years

Intel Inc is looking to acquire a new equipment for a project that will last for eight years. The after-tax required rate of return of the project is 12% per annum. Intel can borrow at a before-tax interest rate of 10% per annum and buy the equipment outright or lease the equipment from ABC’s Leasing. The applicable corporate tax rate is 28% and the equipment will be fully depreciated to zero over the eight years using a straight-line method. Intel evaluated the lease and decided to buy the equipment by borrowing since the NPV of lease versus borrow-to-buy analysis was estimated to be -$10,000. However, subsequently Intel realised that in the analysis the purchase cost of the equipment had been under-estimated by $20,000, and also the salvage value of the equipment (at the end of the lease term) had been under-estimated by $7,000. Given the correct purchase price and salvage value, which of the following statements now accurately describes Intel’s decision regarding the acquisition of…