question 20 Albernie LTD purchase a CCA class 8 (CCA rate of 20%) item of equipment for $90000 the equipment was the only item in the class 8 capital cost allowance pool the equipment is expected to generate savings in the amount of $40000 per year the company uses straight line depreciation estimates a 3 year useful life with $20000 salvage value for the new equipment the tax rate is 35% and albernie has a required rate of return of 9% 

1-what is the net present value of the albernie ltd investment in equipment ? 

1-$1480 

2-$9382 

3-$(1075) 

4-$89799 

5-$8357 

2-what is present value of the after tax savings that albernie ltd expects during the useful life of the equipment ? 

1-$101252 

2-$42188 

3-$50370 

4-$65814 

5-$81257

Answer rating: 100% (QA)

To calculate the present value of the investment we use the present value of an annuity formula and ... View the full answer