Question: Harrison Ltd. is considering purchasing a new long-term asset. It has a cost of $1,350,000, an expected 6- year life and a salvage value of

Harrison Ltd. is considering purchasing a new long-term asset. It has

Harrison Ltd. is considering purchasing a new long-term asset. It has a cost of $1,350,000, an expected 6- year life and a salvage value of $90,000. The equipment qualifies as a class 8 (20% CCA) asset and Harrison has a required rate of return of 10% and an effective tax rate of 32%. Assume the asset will be placed in a pool and the pool will continue upon disposition. For tax purposes the disposition will occur on day 1 of Year 7. What is the after-tax cost of the asset (rounded to nearest dollar)? Note: use the formula for the present value of the tax shield that is in the supplemental exam file posted on eClass. Select one: a. $1,350,000 cross out b. $1,075,091 cross out c. $1,260,000 cross out d. $1,085,920 cross out Harrison Ltd. is considering purchasing a new long-term asset. It has a cost of $1,350,000, an expected 6- year life and a salvage value of $90,000. The equipment qualifies as a class 8 (20% CCA) asset and Harrison has a required rate of return of 10% and an effective tax rate of 32%. Assume the asset will be placed in a pool and the pool will continue upon disposition. For tax purposes the disposition will occur on day 1 of Year 7. What is the after-tax cost of the asset (rounded to nearest dollar)? Note: use the formula for the present value of the tax shield that is in the supplemental exam file posted on eClass. Select one: a. $1,350,000 cross out b. $1,075,091 cross out c. $1,260,000 cross out d. $1,085,920 cross out

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