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Answer questions A-D Spherical Manufacturing recently spent $20 million to purchase some equipment used in the manufacture of disk drives. This equipment has a CCA
Answer questions A-D
Spherical Manufacturing recently spent $20 million to purchase some equipment used in the manufacture of disk drives. This equipment has a CCA rate of 45% and Spherical's marginal corporate tax rate is 35%. a. What are the annual CCA deductions associated with this equipment for the first five years? b. What are the annual CCA tax shields for the first five years? c. What is the present value of the first five CCA tax shields if the appropriate discount rate is 8% per year? d. What is the present value of all the CCA tax shields assuming the equiment is never sold and the appropriate discount rate is 8% per yearStep by Step Solution
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