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Check my work 4. Ms. T. Potts, the treasurer of Ideal China, has a problem. The company has just ordered a new kiln for $448,000.
Check my work 4. Ms. T. Potts, the treasurer of Ideal China, has a problem. The company has just ordered a new kiln for $448,000. Of this sum, $56,000 is described by the supplier as an installation cost. Ms. Potts does not know whether the Internal Revenue Service (IRS) will permit the company to treat this cost as a tax-deductible current expense or as a capital investment. In the latter case, the company could depreciate the $56,000 straight-line over 5 years. The tax rate is 30% and the opportunity cost of capital is 5%. 6.66 points Skipped a. What is the present value of the cost of the kiln if the installation cost is treated as a separate current expense? b. What is the present value of the cost of the kiln if the installation cost is treated as a part of the capital investment? (Round your answer to the nearest whole dollar amount.) ook References a. Present value b. Present value
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