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A firm is considering the purchase of a new equipment costing $6,052,025 which qualifies for a 26% CCA rate. This equipment has a 4-year life
A firm is considering the purchase of a new equipment costing $6,052,025 which qualifies for a 26% CCA rate. This equipment has a 4-year life after which it can be sold for $621,980. The firm can lease it for $1,531,680 per year for its useful life. Assume that the firm makes payments at the end of the year, the asset pool remains open, the tax rate is 41%, and the pre-tax cost of borrowing is 6.34%. What is the present value of the CCA tax shield? Question 11 options: $1,847,364 $1,895,979 $1,944,593 $1,993,208 $2,041,823
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