Determine the present worth of all future tax savings

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Question -

a) Complete the following table below in your exam booklet provided that describes the cash flow tax savings for the first 5 years of a $1,000,000 capital investment expenditure in the next two years - $250,000 this year and $750,000 next year. Assume the half year tax rule that applies in Canada, 40% corporate tax rate and a CCA rate of 20%.

b) Determine the present worth of all future tax savings due to the CCA of the first $250,000 invested in the first year. The after-tax MARR is 10%. Show your work.

Reference no: EM132608353

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