A firm owns a machine that costs £10,000. The machine will last for 2 years and will then be scrapped with a value of zero. The firm discounts projects at 20% per annum, the corporate tax rate is 28% and the machine attracts capital allowances at 25% per annum on a reducing balance basis. What will the sum of the present values of the tax savings due to capital allowance be over the life of the machine?

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To calculate the sum of the present values of the tax savings due to capital allowance over the life ... View the full answer