Question
10 points A proposed cost-saving device has an installed cost of $520,000. It is in Class 8 (CCA rate = 20%) for CCA pu function
10 points A proposed cost-saving device has an installed cost of $520,000. It is in Class 8 (CCA rate = 20%) for CCA pu function for five years, at which time it will have no value. There are no working capital consequences from th rate is 35%. a. What must the pre-tax cost savings be for us to favour the investment? We require an 10% return. (Hint: This problem of setting a bid price.) (Do not round your intermediate calculations. Round the final answer to 2 d sign in your response.) Cost savings $164,525.27 b. Suppose the device will be worth $76,000 in salvage (before taxes). How does this change your answer? (D intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) Cost savings $144,531.61 K
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