Question: Your company is considering a project which will require the purchase of $785,000 in new equipment.The company expects to sell the equipment at the end

Your company is considering a project which will require the purchase of $785,000 in new equipment.The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class.Annual sales from this project are estimated at $284,000.Initial net working capital equal to 35.50% of sales will be required.All of the net working capital will be recovered at the end of the project. The firm requires a 11.75% return on similar investments.The tax rate is 35%, and the project life is 5 years.There are no other operating expenses.If the equipment is in a 40.00% CCA class, what is the present value of the CCA tax shield?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Your company is considering a project which will require the purchase of $675,000 in new equipment.The company expects to sell the equipment at the end of the project for 25% of its original cost,...

Your company is considering a project which will require the purchase of $745,000 in new equipment.The company expects to sell the equipment at the end of the project for 25% of its original cost,...

Your company is considering a project which will require the purchase of $815,000 in new equipment.The company expects to sell the equipment at the end of the project for 25% of its original cost,...

Use a calculator to approximate the value. Round your answer to two decimal places. arccos(0.051)

The data from exercise 3 follow. The estimated regression equation for these data is y = 7.6 + .9x. What percentage of the total sum of squares can be accounted for by the estimated regression...

Compare the material efficiency of the economies of the world and the European Union.

What other publications/presentations does the person have?

Sager Company manufactures variations of its product, a technopress, in response to custom orders from its customers. On May 1, the company had no inventories of goods in process or finished goods...

17.with respect to interest rate risk, which of the following statement is/are correct? (2 points) If short-term interest rates increase the required rate of return on money market securities will...

Fingerprint and retinal eye scanning are examples of which type of security feature? Two - factor authentication Remote access Encryption Biometrics

This is a circuit design i made in TinkerCAD. I am trying to use the green LED with variable brightness as a function of the Ultrasonic sensor reading. The three Red LEDs are a warning indicator if...

Question 3 (10 points) Listen What is corporate personhood, and how does it relate to corporate social responsibility? Relate this to our discussion on Exxon Mobile (the largest Oil and Gas...

Problem 4. PREVIEW ONLY -- ANSWERS NOT RECORDED (2 points) Assume you are to select digits from the set {2, 3, 4, 5, 6, 7, 9} to form a number between 20 and 900. 60 (1) HOW MANY such numbers can be...

Problem 1: Consider the following Matrix A: A = [222] a) Find the Eigenvalues of A. Show all your work by hand b) Find the Eigenvectors of A. Show all your work by hand c) Normalize the Eigenvectors....

(1) You need to move an object having mass of 23 kg. In one case, you are pulling at an angle of 30. In another case, you are pushing it at the same angle. Frictional coefficient = 0.50. (a) Compute...

2. Suppose that the incurred losses are $800,000 in one policy period. Mr. Arthur has a retrospective rating plan. Based on the following table, at the end of this policy period Arthur would still...

Thalina Mineral Works is one of the worlds leading producers of cultured pearls. The companys condensed statement of cash flows for the years 20182020 follows. Required Comment on Thalina Mineral...

74. The mode of a numerical data set is the value that occurs most frequently in the set. a. Determine the mode for the cadence data given in Exercise 73. b. For a categorical sample, how would you...

70. Elevated energy consumption during exercise continues after the workout ends. Because calories burned after exercise contribute to weight loss and have other consequences, it is important to...

72. Anxiety disorders and symptoms can often be effectively treated with benzodiazepine medications. It is known that animals exposed to stress exhibit a decrease in benzodiazepine receptor binding...