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A firm is considering the purchase of a new equipment costing $9,252,695 which qualifies for a 44% CCA rate. This equipment has a 4-year life
A firm is considering the purchase of a new equipment costing $9,252,695 which qualifies for a 44% CCA rate. This equipment has a 4-year life after which it can be sold for $1,271,240. The firm can lease it for $2,504,580 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 23%, and the pre-tax cost of borrowing is 10.66%. What is the present value of the CCA tax shield? Question 2 options:
$1,559,411
$1,598,397
$1,637,382
$1,676,367
$1,715,352
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