. Flower City Inc (FCI) is considering the purchase of a new machine for $50,000, installed. FCI will use the CCA method to depreciate the machine. This machine is included in CCA class 8 (20%). FCI expects to sell the machine at the end of its 4-year operating life for $10,000.

a) If FCI's marginal tax rate is 40%, what will be the present value of the CCA tax shield when it disposes of the machine at the end of Year 4? Assume that the relevant discount rate is 10%.

PV of Tax shield = ______________________

b) Would your answer change if the machine is designed (engineered life) to last 10 years?

(Answer Yes/No)

c) Would your answer change if the machine has a design fault that takes $10,000 to repair in year 3?

(Answer Yes/No)

Show the calculations also.