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Calvin, Callan, and Co, (CCC) a fledgling corporate advisory firm headquartered in Duluth, Minnesota, has been considering opening a new office in Austin, Texas, for
Calvin, Callan, and Co, (CCC) a fledgling corporate advisory firm headquartered in Duluth, Minnesota, has been considering opening a new office in Austin, Texas, for several years. In fact, 5 years ago, CCC purchased land in Austin for $4 million. The land has a current market value of $5 million. Construction costs for the new building would total $15 million, and would be depreciated over the next 27.5 years to $0. Additionally, CCC estimates that it would need to spend an additional $4 million to advertise the office's opening to attract Austin-based clients. CCC faces a 20% corporate tax rate and would have to pay this rate on any gains on sales of fixed assets. Assume
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