Judson Industries is considering a new project. The project will initially require $749,000 for new fixed assets,$238,000 for additional inventory, and $25,000 for additional accounts receivable. Accounts payable isexpected to increase by $70,000. The fixed assets will belong in a 30% CCA class. At the end of the project, infour years' time, the fixed assets can be sold for 40% of their original cost. The net working capital will returnto its original level at the end of the project. The project is expected to generate annual sales of $944,000 withrelated cash expenses of $620,000. The tax rate is 35% and the required rate of return is 14%.What is the amount of the present value of the CCA tax shield for this project?(Use the AllP rule whencalculating the CCA Tax Shield. I.E use 1.5 instead of 0.5)O a. $104,860Ob. $112,290Oc. $125,432O d. $147,383Oe. $199,600

Name: Judson Industries is considering a new project. The project will init
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Description: Judson Industries is considering a new project. The project will initially require $749,000 for new fixed assets,$238,000 for additional inventory, and $25,000 for additional accounts receivable. Accounts payable isexpected to increase by $70,000. T

The capital cost allowance (CCA) is a tax deduction that allows eligible taxpayers to deduct the…

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Judson Industries is considering a new project. The project will initially require $749,000 for new fixed ass $238,000 for additional inventory, and $25,000 for additional accounts receivable. Accounts payable is expected to increase by $70,000. The fixed assets will belong in a 30% CCA class. At the end of the project four years' time, the fixed assets can be sold for 40% of their original cost. The net working capital will retu to its original level at the end of the project. The project is expected to generate annual sales of $944,000 v related cash expenses of $620,000. The tax rate is 35% and the required rate of return is 14%. What is the amount of the present value of the CCA tax shield for this project?(Use the AllP rule when calculating the CCA Tax Shield. I.E use 1.5 instead of 0.5) a. $104,860

Judson Industries is considering a new project. The project will initially require $749,000 for new fixed ass $238,000 for additional inventory, and $25,000 for additional accounts receivable. Accounts payable is expected to increase by $70,000. The fixed assets will belong in a 30% CCA class. At the end of the project four years' time, the fixed assets can be sold for 40% of their original cost. The net working capital will retu to its original level at the end of the project. The project is expected to generate annual sales of $944,000 v related cash expenses of $620,000. The tax rate is 35% and the required rate of return is 14%. What is the amount of the present value of the CCA tax shield for this project?(Use the AllP rule when calculating the CCA Tax Shield. I.E use 1.5 instead of 0.5) a. $104,860

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section10.A: Mutually Exclusive Investments Having Unequal Lives

Problem 2P

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