Albernie Ltd. purchased a CCA Class 8 (CCA rate of 20%) item of equipment for $90,000. The equipment was the only item in the Class 8 capital cost allowance pool. The equipment is expected to generate savings in the amount of $40,000 per year. The company uses straightline depreciation, estimates a 3-year useful life with a $20,000 salvage value for the new equipment. The tax rate is 35%, and Albernie has a required rate of return of 9.0%.

What is the present value of the tax shield that Albernie Ltd. can expect from the equipment?

A. $ 17,099

B. $ 18,124

C.$ 12,816

D.$ 10,222

E. $ 7,667

A project's net present value is increased if

A.the CCA rate is decreased.

B. the rate of inflation rises.

C. the CCA rate is increased.

D. the company's net income is negative during the life of the project.