# Question

You are given the following information: C0 = $300,000; CCA rate (d) = 0.3; T = 0.4; RF = 4.5%; project beta = 1.2; market risk premium = 10%; SVn = $35,000; UCCn = $55,000. This project has a 5-year life.

a. Calculate the discount rate.

b. Assuming that the asset class is terminated, calculate the present value of the CCA tax shield.

c. Calculate the PV (CCA tax shield) if the asset class remains open.

a. Calculate the discount rate.

b. Assuming that the asset class is terminated, calculate the present value of the CCA tax shield.

c. Calculate the PV (CCA tax shield) if the asset class remains open.

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