What is the present value of the cca tax shield

Assignment Help Financial Management

Reference no: EM132020357

1. If a firm produces a 12 percent return on assets and also a 12 percent return on equity, then the firm:

a. is using its assets as efficiently as possible.

b. has no net working capital.

c. has an equity multiplier of 2.

d. also has a current ratio of 10.

e. has no debt of any kind.

2. 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 35%, and the appropriate discount rate is 10%?

a. $86,994

b. $40,143

c. $46,557

d. $52,215

e. $66,623

Reference no: EM132020357

Questions Cloud

What is weighted average cost of capital : Nacho Libre S.A. has 8,000,000 common shares outstanding that trade for $35.00 per share. What is the weighted average cost of capital?

Firm is considered the gold standard of valuation : Explain why the discounted cash flow analysis (DCFA) approach to value the operating firm is considered the “gold standard” of valuation.

Financial markets are less efficient than real asset markets : Generally speaking, financial markets are less efficient than real asset markets.

Calculate the economic value added assuming : Calculate the economic value added assuming its cost of capital is 10%.

What is the present value of the cca tax shield : 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,

Projects with nontraditional cash flows : Which of the following decision rules results in multiple answers for projects with nontraditional cash flows?

What is turner total capital gain on this investment : Turner sold all of his shares for $49 per share. What is Turner's total capital gain on this investment?

What is the dividend firm is expected to pay over one year : The stock's dividend yield is 9%. What is the dividend the firm is expected to pay over a one year period if the current stock price is $40?

In consideration of the factory project : In consideration of the factory project, what amount (if any) should the land be valued at?

User Account

All Pages