A new machine costs $764,850 and falls in a 25.50% CCA class. The machine will have zero value after 5 years of use but will save $355,360 annually in operating costs before taxes in those five years. Assume a tax rate of 32.25%. Using a required return of 13.19%, what is the present value of the CCA tax shield? Options $137,790 $141,618 $145,445 $149,273 $153,100
A new machine costs $764,850 and falls in a 25.50% CCA class. The machine will have zero value after 5 years of use but will save $355,360 annually in operating costs before taxes in those five years. Assume a tax rate of 32.25%. Using a required return of 13.19%, what is the present value of the CCA tax shield? Options $137,790 $141,618 $145,445 $149,273 $153,100
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 3P
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Question
A new machine costs $764,850 and falls in a 25.50% CCA class. The machine will have zero value after 5 years of use but will save $355,360 annually in operating costs before taxes in those five years. Assume a tax rate of 32.25%. Using a required return of 13.19%, what is the present value of the CCA tax shield?
Options
$137,790 |
|
$141,618 |
|
$145,445 |
|
$149,273 |
|
$153,100 |
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