Question: Bevan Co. is considering investing in an equipment to implement a cost-cutting proposal. The pre-tax cost reduction is expected to equal $5,000 for each of

Bevan Co. is considering investing in an equipment to implement a cost-cutting proposal. The pre-tax cost reduction is expected to equal $5,000 for each of the four years of the project's life. The equipment has an initial cost of $18,500 and belongs in a 20% CCA class. Bevan Co. has a tax rate of 30%. What is the value of the depreciation tax shield for year 3 of the project?

  1. $555
  2. $679
  3. $799
  4. $863
  5. $999

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