Solution-What tax shield lost and the pv of the salvage

What tax shield lost and the pv of the salvage value

Reference no: EM132792511

MCT. corp is reviewing a possible investment in a new plant for a new product line. The new product is expected to have a life of 10 years, which is the project timeline. MCT has decided to use the NPV method to analyze this project. The new plant will cost $10,000,000 to build and will last 25 years, at which time it will be worth $3,000,000. At the end of 10 years, the building could be sold for $7,500,000. The building qualifies for CCA at the rate of 10%, and there are no disposals of assets in the first year of the project. Assume that there are other assets remaining in the class and that the balance in the CCA account will be positive after the disposal. MCT's income tax rate is 27% and its cost of capital is 12% for this project.

Problem 1: What is the tax shield, tax shield lost and the PV of the salvage value?

Reference no: EM132792511

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What tax shield lost and the pv of the salvage value

Reference no: EM132792511

Reference no: EM132792511

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