Reference no: EM132510994

Question a: A New machine will cost $720000 it is in a CCA class pool that uses a declining balance rate of 20% the company tax rate is 42% and it requires a 12% rate of return on investments calculate the present value of the tax shield the first year assuming the savings occur at year end

1-$54000

2-$60480

3-$37285.71

4-$30240

5-$27000

Question b: Soda manufacturing company provides vending machines for soft drink manufactures. the company has been investing a new piece of machinery for its production department the old equipment has a remaining life of 1 year and no sales value the new equipment has a value of $52650 with a three year life the expected additional cash inflows are $25000 per year end of year payments what is the internal rate of return ?

1-16 percent

2-8 percent

3-20 percent

4-12 percent

5-24 percent