A proposed cost saving device has an installed cost of $ 200,000. It is a class with a CCA rate of 20%. It will operate for 5 years at which time it will not have any more value. There are no working capital requirements from this investment and tax rate is 37%. If your required rate of return is 14%, then:

The pre-tax cost of annual savings for you to favor this project is:

Select one:

a. $ 58,140

b. $ 73,700

c. $ 95,600

d. $ 125,310

e. $ 63,670

If your device at the end of 5 years is worth $28,500 in salvage, then the resultant pretax cost savings would have to be:

Select one:

a. $ 63,760

b. $ 65,920

c. $ 67,100

d. $ 72,400

e. $ 68,400