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A firm is considering replacing an old piece of equipment with a newer version that costs $3.57 million and has a CCA rate of 35%
A firm is considering replacing an old piece of equipment with a newer version that costs $3.57 million and has a CCA rate of 35% per year. The old equipment could be sold today for $225,000. The new equipment could be sold for $524,850 at the end of eight years. There are no capital gains or losses to worry about. There are no net working capital changes required. The firm pays a corporate tax rate of 39% and its WACC is 13%. What would be the total present value of net capital spending in this case
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