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

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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2. You plan on buying a bottling machine for $2
million, which can be salvaged for $400,000 in 8
years. Your tax rate is 43% and the CCA rate is
30%. Your cost of capital is 13%. What is
present value of the CCA tax sheild? (Answer: E)
a. $338,447 b. $378,521 c. $422,781 d. $458, 402
e. $520,348
Transcribed Image Text:2. You plan on buying a bottling machine for $2 million, which can be salvaged for $400,000 in 8 years. Your tax rate is 43% and the CCA rate is 30%. Your cost of capital is 13%. What is present value of the CCA tax sheild? (Answer: E) a. $338,447 b. $378,521 c. $422,781 d. $458, 402 e. $520,348
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