Kaywinnet Inc. is currently assessing whether it should purchase a new robotic production line. The new robotic
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Question:
Kaywinnet Inc. is currently assessing whether it should purchase a new robotic production line. The new robotic line will cost $2,750,000 and last 10 years. The equipment qualifies for a CCA rate of 30%. It also qualifies for the Accelerated Investment Incentive with 1.5 times CCA allowed in the year of acquisition. The company’s current cost of capital for this project is 10% and its income tax rate is 28%. What is the present value of the CCA tax shield from purchasing the new robotic production line?
options:
$577,500 | |
$603,750 | |
$635,526 | |
$644,135 |
Related Book For
Management Accounting
ISBN: 978-0132570848
6th Canadian edition
Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu
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