If Company XYZ decides to depreciate linearly (A), the net investment in fixed assets in PV terms is:

Select one:

a. $ 35.4 MM

b. $ 37.4 MM

c. $ 38.9 MM

d. $ 40.4 MM

e. $ 42.7 MM

If Company XYZ decides to depreciate using the UCC approach (B), the net investment in fixed assets in PV terms is:

Select one:

a. $ 30.2 MM

b. $ 32.7 MM

c. $ 35.9 MM

d. $ 37.2 MM

e. $ 39.1 MM

Company XYZ is about to undertake a capital project that requires $ 50 MM investment in fixed assets and $ 5 MM in working capital. For this particular project, the Government allows XYZ to: A. depreciate the fixed assets linearly over 10 years or B. depreciate the same assets using the UCC approach and the applicable CCA rate is 20% The project is expected to last 15 years after which the said fixed assets would have $ 7 MM of market value. Company XYZ has a corporate tax rate of 40% and a cost of capital of 12%