AAA corporation is considering replacing a projector system in one of its cinemas. The new projector has super-holographic sound and is able to project laser-sharp images. These features would improve the attendance at the theatre; and the new projector could cut repair costs dramatically. The new projector costs $250,000 and has a useful life of 15 years, at which time it could be sold for $20,000. The projector currently being used was purchased for $150,000 five years ago and can be sold now for $50,000. In 15 years the old projector would be scrapped for $5,000. The new projector would increase operating income by $50,000 annually; it belongs to Class 9 with a CCA rate of 25 percent. The company requires a 15 percent return on replacement assets and the corporate tax rate is 43.5 percent.

1. Considering the above information, what is the present value of the tax shield on AAA corporation's projector system assuming the tax shield goes on in perpetuity? (Hint: use 4 decimal places for your calculations.)

A. $52,327.62. B. $62,375.55. C. $50,828.80. D. $70,327.85. E. None of the above.

2. Considering the above information, What is the NPV of the new projector system? (Hint: use 4 decimal places for your calculations.)

A. $17,377. B. $20,396. C. $21,558. D. $19,122. E. None of the above.