What are the annual cca tax shields for the first five years

Assignment Help Finance Basics

Reference no: EM133325627

Question:Spherical Manufacturing recently spent $15 million to purchase some equipment used in the manufacture of disk brakes. This equipment has a CCA rate of 25% and Spherical's marginal corporate tax rate is 35%.

a. What are the annual CCA deductions associated with this equipment for the first five years?

b. What are the annual CCA tax shields for the first five years?

c. What is the present value of the first five CCA tax shields if the appropriate discount rate is 10% per year?

d. What is the present value of all the CCA tax shields assuming the equipment is never sold if the appropriate discount rate is 10% per year?

e. How might your answer to part d change if Spherical anticipates that its marginal corporate tax rate will increase substantially over the next five years?

Reference no: EM133325627

Questions Cloud

How memory banks can use used with von neumann architecture : Why does it help to have multiple memories, each with their own controller? How the memory banks can use used with Von Neumann Architecture.

Reading sociology as scientific discourse : In the reading "Sociology as Scientific Discourse," you learned that Jeffrey Alexander argues that "science is a discourse based on reason."

Writing a self-care strategies : Students will write focus on identifying 3-5 reasons for burnout, as well as writing self-care strategies that are important for your own personal application.

What would you prefer in an object oriented language : What would you prefer in an object oriented language? structure type equivlence or name type equivalence? Explain your choice in detail with example.

What are the annual cca tax shields for the first five years : What are the annual CCA deductions associated with this equipment for the first five years and What are the annual CCA tax shields for the first five years

How are encodings same or different from run-length encoding : How are the encodings the same or different from run-length encodings?Why wouldn't a game using just run-length encodings be challenging?

Explain social issues : With all the social issues discussed over this semester, pick one that you feel directly connects to terrorism or the recruitment of terrorists.

What is the net present value of rebuilding the asset : What is the net present value of rebuilding the asset and Will shareholders rebuild the asset in the event of a loss? Why or why not?

What is the bond''s value if it is sold on the maturity date : What is the bond's value if it is sold three years before it matures and interest is paid annually and What is the bond's value if it is sold on the maturity

User Account

All Pages