A company has purchased a machine (CCA rate 28% ) at $229,000 and has a tax rate of 37.00%. By how much will the NPV change if the company is able to obtain a $17,000 salvage value for its machine at the end of the project's life in Year 8 ? Assume a discount rate of 12.20% and that all else remains the same. a. $1,744 b. $6,769 c. $12,619 d. $8,513 e. $5,024 ABC Corp. spends $456,000 on new machinery for a new project. The machine falls into a 30% CCA class (half-year rule applies) and has a 9-year useful life. The company expects to use the machine for two years and then sell it for $X, which is equivalent to the remaining UCC (undepreciated capital cost) at the end of year 2 . What is $X ? a. $329,460 b. $223,440 c. $339,720 d. $271,320 e. $116,280 ABC company is considering the acquisition of machine which belongs to a class with CCA rate of 44%. The cost of the machine is $1,048,000. The expected economic life is 9 years. Salvage value is $207,000. The discount rate is 7.70% and the marginal tax rate is 35%. Assume the half-year rule applies. What is the CCA tax shield for year 2 ? a. $359,674 b. $258,227 c. $286,104 d. $90,380 e. $125,886 BTC Corp. is working on a project where it has to invest $96,100 in inventory today that will be recovered by the end of the project in 6 years. If the cost of capital is 9.90%, what is the impact on the NPV of the project? Assume all else remains the same. a. $0 b. $41,557 c. $96,100 d. $9,514 e. $54,543 A company has purchased a machine (CCA rate 28% ) at $229,000 and has a tax rate of 37.00%. By how much will the NPV change if the company is able to obtain a $17,000 salvage value for its machine at the end of the project's life in Year 8 ? Assume a discount rate of 12.20% and that all else remains the same. a. $1,744 b. $6,769 c. $12,619 d. $8,513 e. $5,024 ABC Corp. spends $456,000 on new machinery for a new project. The machine falls into a 30% CCA class (half-year rule applies) and has a 9-year useful life. The company expects to use the machine for two years and then sell it for $X, which is equivalent to the remaining UCC (undepreciated capital cost) at the end of year 2 . What is $X ? a. $329,460 b. $223,440 c. $339,720 d. $271,320 e. $116,280 ABC company is considering the acquisition of machine which belongs to a class with CCA rate of 44%. The cost of the machine is $1,048,000. The expected economic life is 9 years. Salvage value is $207,000. The discount rate is 7.70% and the marginal tax rate is 35%. Assume the half-year rule applies. What is the CCA tax shield for year 2 ? a. $359,674 b. $258,227 c. $286,104 d. $90,380 e. $125,886 BTC Corp. is working on a project where it has to invest $96,100 in inventory today that will be recovered by the end of the project in 6 years. If the cost of capital is 9.90%, what is the impact on the NPV of the project? Assume all else remains the same. a. $0 b. $41,557 c. $96,100 d. $9,514 e. $54,543
