A company purchased a new machine for $12,400. The expected useful life of this machine is six

Question:

A company purchased a new machine for $12,400. The expected useful life of this machine is six years with no salvage value. The new machine’s CCA rate is 17%. The company has a minimum after-tax desired rate of return of 8% and a tax rate of 33%.

Required:

What is the present value of the tax shield?

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...

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