An asset is bought by Placer Ltd for a project at a cost of $$ 25,000$. The
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An asset is bought by Placer Ltd for a project at a cost of $\$ 25,000$. The asset will be used for four years before being disposed of for $\$ 5,000$. Tax-allowable depreciation is available at $25 \%$ reducing balance and the tax rate is $30 \%$.
(a) Calculate the tax allowable depreciation and hence the tax savings for each year if tax is paid (and saved) a year in arrears.
(b) How would your answer to the previous question change if the sales proceeds for the asset at the end of the project had been $\$ 15,000$ ?
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