What will the present value of the cca tax shield

Reference no: EM13286099

M&M is considering the purchase of a new machine for $50,000, installed. M&M will use the CCA method to depreciate the machine. This machine is included in CCA class 8 (20%). MM expects to sell the machine at the end of its 4-year operating life for $10,000. If M&M's tax rate is 40%, what will the present value of the CCA tax shield when it disposes of the machine at the end of year 4? Assume that the relevant discount rate is 10%.

A) $10,905
B) $9,059
C) $9,400
D) $8,930
E) $1,822

Reference no: EM13286099

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