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Compute the amount of tax savings from CCA

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Reference no: EM132902693

Question - Computeronics purchased a new piece of equipment at a cost of $60,000 at the beginning of the year. For tax purposes the machine is a Class 8 asset (15% declining balance). The company has a 32 percent income tax rate. Assume that the company has no other Class 8 assets during the period.

Required -

a. Compute the amount of tax savings from CCA for the first three years.

b. Compute the amount of tax savings from CCA for the first three years using a required rate of return of 12 percent.

Reference no: EM132902693

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