Johnson Tech. is considering a project would cost $22m in initial investment and would result in cost savings, before tax, of $3.25m per year for five years. The equipment could be sold for $4.5m at the end of the five years. The equipment would also result in an increase in NWC of $500,000, which will be recovered at the end of the project. The WACC is 9.39%. The CCA rate is 25% and the corporate tax rate is 34%.

Calculate PVCCATs using the Tax Shield Approach