Calculate the net present value of the investment

Assignment Help Financial Management

Reference no: EM133674443

Question

Elf on a Shelf Company bought a new computer-assisted design (CAD) software for $10,000,000 at the beginning of Year 1. The software has a useful life of 3 years and will save the company annual cash operating expenses of $4,000,000 in each of those 3 years. The software will have a zero net salvage value at the end of 3 years. It belongs to Class 12 with a capital cost allowance (CCA) rate of 100%. With special permission from the Canada Revenue Agency, the half-year CCA rule has been waived for the company to permit a maximum 100% CCA deduction for Year

1. The company's income tax rate and after-tax cost of capital are 40% and 12%, respectively.

2. Calculate the net present value (NPV) of the investment. (NPV of the investment = $(664,176.39). Calculated using the NPV formula of Microsoft Excel PV CCA tax shield + PV savings in operating expenses - initial investment.

Reference no: EM133674443

Questions Cloud

Advanced cyber exploitation and mitigation methodologies : CST 630 Advanced Cyber Exploitation and Mitigation Methodologies, University of Maryland Global Campus - find a plethora of information regarding

Calculate the risk neutral probability of stocks going down : The current price of southwest airline stocks is $39. Calculate the risk neutral probability of stocks going down for this year pick the closest number.

Analyze the concepts in the context of a criminal justice : Write a comprehensive scholarly essay analyze the concepts in the context of a criminal justice organizational issue.

Help develop reflection to the standard : Help develop a reflection to the following standard. The program shall prepare candidates who demonstrate knowledge of the theories and skills of accounting

Calculate the net present value of the investment : Elf on a Shelf Company bought a new computer-assisted design (CAD) software. Calculate the net present value (NPV) of the investment.

Describe the philosophical assumptions-attitudes of science : Describe the philosophical assumptions or "attitudes" of science and explain why these are important as a foundation for applied behavior analysis.

Discuss dsm- 5 autism spectrum disorder : Can you provide some discussion questions for DSM- 5 Autism Spectrum Disorder to discuss in class?

Effective relationship building to positive wellbeing : SCP103 Self-Care Practices, Torrens University Australia - Explore common, contemporary, healthy activities of daily living such as nutrition, activity

Which is about the nature of reality is known as ontology : Explain my ontological assumption which is about The study of the nature of reality is known as ontology, as per Creswell and Poth (2018) and Yilmaz (2013).

User Account

All Pages