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A proposed cost-saving device has an installed cost of $550,000. It is in Class 8 (CCA rate =20% ) for CCA purposes. It will actually

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A proposed cost-saving device has an installed cost of $550,000. It is in Class 8 (CCA rate =20% ) for CCA purposes. It will actually function for five years, at which time it will have no value. There are no working capital consequences from the investment, and the tax rate is 35% a. What must the pre-tax cost savings be for us to favour the investment? We require an 10% return. (Hint: This one is a variation on the problem of setting a bid price.) (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) Cost savings b. Suppose the device will be worth $79,000 in salvage (before taxes). How does this change your answer? (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) Cost savings A new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year (Class 10). The monitor would actually be worthless in five years. The new monitor would save $460,000 per year before taxes and operating costs. If we require a 15% return, what is the NPV of the purchase? Assume a tax rate of 40%. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV Hubrey Home Inc. is considering a new three-year expansion project that requires an initial fixed asset investment of $4.4 million. The fixed asset falls into Class 10 for tax purposes (CCA rate of 30% per year), and at the end of the three years can be sold for a salvage value equal to its UCC. The project is estimated to generate $2,700,000 in annual sales, with costs of $855,000. If the tax rate is 35%, final answers to 2 decimal places. Omit $ sign in your response.) dollars. Do not round your intermediate calculations. Round the

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