Question
Hi there having trouble with this finance question. Your firm is thinking about purchasing a new machine. The new machine would cost $4,500,000 today. The
Hi there having trouble with this finance question.
Your firm is thinking about purchasing a new machine. The new machine would cost $4,500,000 today. The new machine would operate for 4 years at which time it could be sold for $900,000. The CCA rate is 30%. The asset class will remain open. The new machine will generate revenues of $1,750,000 per year. The annual operating costs associated with the new machine are $1,100,000 per year. The corporate tax rate is 45%. The required rate of return is 9%.
Question: What is the present value of the CCA tax shield? Be certain to include any necessary adjustments due to salvage value.
A) $1,272,682.21
B) $1,336,990.61
C) $1,493,383.91
D) $1,246,153.85
E) $1,181,845.45
Tried multiple ways to get the answer just cant seem to figure it out!!!
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