What is the present value of the cca tax shield

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Reference no: EM132020325

1. You purchase a machine for $200,000 which belongs in a 30% CCA class. What is the present value of the CCA tax shield on the machine if it is sold at the end of the sixth year for $24,000, your tax rate is 34%, and the appropriate discount rate is 10%?

a. $46,557

b. $86,994

c. $40,143

d. $66,623

e. $45,227

2. Bob's Toys has a fixed asset turnover rate of 1.2 and a total asset turnover rate of .84. Gerold's Toys has a fixed asset turnover rate of 1.1 and a total asset turnover rate of .96. Both companies have similar operations. Bob's Toys:

a. is generating $1 in sales for every $1.20 in net fixed assets.

b. is using its total assets less efficiently than Gerold's Toys.

c. has $.84 in total assets for every $.96 Gerold's has in total assets.

d. is generating $1.20 in net income for every $1 in net fixed assets.

e. is using its fixed assets less efficiently than Gerold's Toys.

Reference no: EM132020325

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