ABC Corp. makes a $96,000 investment in capital equipment that generates before-tax operating cash flows (excluding CCA tax shield) of $32,900 per year for 9 years. The project requires a net working capital of $7,000 today which will be recovered at the end of the project's life. The CCA rate is 22% (declining balance method) and the half-year rule applies. The discount rate is 13.80%, the tax rate is 35% and the expected salvage value is zero. What is the present value of the CCA tax shield over the project's life?

ABC Corp. makes a $96,000 investment in capital equipment that generates before-tax operating cash flows (excluding CCA tax shield) of $32,900 per year for 9 years. The project requires a net working capital of $7,000 today which will be recovered at the end of the project's life. The CCA rate is 22% (declining balance method) and the half-year rule applies. The discount rate is 13.80%, the tax rate is 35% and the expected salvage value is zero. What is the present value of the CCA tax shield over the project's life?

Name: ABC Corp. makes a $96,000 investment in capital equipment that generat
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Description: ABC Corp. makes a $96,000 investment in capital equipment that generates before-tax operating cash flows (excluding CCA tax shield) of $32,900 per year for 9 years. The project requires a net working capital of $7,000 today which will be recovered at

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 8P

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