You plan on buying a bottling machine for $2 llion, which can be salvaged for $400,000 in 8 ars. Your tax rate is 43% and the CCA rate is %. Your cost of capital is 13%. What is esent value of the CCA tax sheild? (Answer: E) $338,447 b. $378,521 c. $422,781 d. $458, 402

pm.2

Assume a machine was purchased 5 years ago for $800,000 and has been 75% depreciated. The firm decides to sell this machine for $350,000. The firm's tax rate is 20%. Calculate how much net cash the sale of this equipment will generate for the firm. Answer rounded to the nearest whole dollar; for example 42,345 for your answer.

Vishnu

F2

Nikul

A project will reduce costs by $42,700 but increase depreciation by $21,100. What is the operating cash flow if the tax rate is 25 percent?   Multiple Choice $47,850 $37,300 $32,025 $15,950 $26,500

Suppose that the marginal tax rate is 15%. If a farmer decides to purchase a combine it will increase his revenue by $6,000 per year, but it will also increase his expenses by $1,000 per year. The before tax rate on this investment is 25%. The life of this investment is 6 years. What is the present value of the after tax net return? $14,133 $12,544 $16,084 $13,706 None of the answers are correct

None

6.  A machine could be purchased for £800,000; it would be used for 3 years and then sold for £580,000. It would qualify for capital allowances at 18% reducing balance basis with a balancing allowance or charge on disposal. The company pays tax at 20% and has a cost of capital of 10%. What is the present value of the tax cashflow at time 1, to the nearest £100? A  £14,700 B  £26,200 C  £28,800 D  £144,000