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What is the present value of tax shield on cca for project

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Question 1: A firm is considering investment in a project which requires the purchase of manufacturing equipment worth $800,000. This equipment belongs to CCA asset Class 43, with a CCA rate of 30%. The project will last for 8 years, at the end of which the equipment can be sold for $150,000. The firm requires a return of 15% on projects of this kind, and its tax rate is 40%. The firm expects that the CCA asset class will remain open when the project is completed. What is the present value of tax shield on CCA for this project?

Select one:

a. $130,761

b. $159,724

c. $186,344

d. $199,420

e. $212,496

Reference no: EM132611881

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