A road building company is purchasing an excavator for $500,000. The corporate tax rate is 45% and

Fantastic news! We've Found the answer you've been seeking!

Question:

A road building company is purchasing an excavator for $500,000. The corporate tax rate is 45% and the expected after-tax rate of return is 12%. What would be the present value of the future tax savings realized from capital cost allowance (CCA)? (Ignore the accelerated CCA rule.)