Question
Jason Industries is considering a new project. Prior to making this decision, the company hired a consultant, at a cost of $22,760, to determine the
Jason Industries is considering a new project. Prior to making this decision, the company hired a consultant, at a cost of $22,760, to determine the viability of this new project. The project will require $271,600 for the purchase of the new machine. There will be $16,700 in delivery charges and $1,300 will be spent on a technician to calibrate the machine. The new project will require an additional $1,150 in inventory, $1,160 in accounts receivables and accounts payable is expected to increase by $990. The new machine belongs in a 30% CCA class. At the end of the project, in 10 years time, the machine can be sold for $57,500. The net working capital will return to its original levels at the end of the project. The project is expected to generate additional revenues of $37,900 and expenses are expected to increase by $3,300. The tax rate is 35% and the required rate of return is 15%. What $ amount of the initial investment is allowed to be depreciated according to Revenue Canada (what is C0)?
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