You are given the following information: C0 = $300,000; CCA rate (d) = 0.3; T = 0.4;

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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.

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Introduction To Corporate Finance

ISBN: 9781118300763

3rd Edition

Authors: Laurence Booth, Sean Cleary

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Question Posted: Feb 25, 2015 09:47 AM

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You are given the following information: C0 = $300,000; CCA rate (d) = 0.3; T = 0.4;

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a k 45 1210 165 b If the asset class is terminated c If ...View the full answer

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