What is the after-tax present worth of a chip

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1. Canada Widgets is looking at a S400 000 digital midget rigid widget gadget (CCA Class 8). It is expected to save S85 000 per year over its 10-year life, with no scrap value. C W s tax rate is 45%, and its after-tax ALARR is 15%. On the basis of an exact IRR, should the company invest?

2. What is the after-tax present worth of a chip placer if it costs S55 000 and saves $17 000 per year? After-tax interest is at 10%. Assume the device will be sold for a Si000 salvage value at the end of its six-year life. The CCA rate is 20%, and the corporate income tax rate is 54%.

Reference no: EM131356242

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