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Monaco Company is considering investing in a new Class 43 production tool. The tool has a cost of $445,000 and is expected to have a
Monaco Company is considering investing in a new Class 43 production tool. The tool has a cost of $445,000 and is expected to have a useful life of 10 years. The tool will be financed with a bank loan with an annual interest expense of $35,600. With the purchase of the new tool, the firm will need to invest $92,000 in current assets. Accounts payable and accruals will increase by $12,000. The firm's cost of capital is 12%; their tax rate is 40%. Based on this information, what cost(s) relevant to the capital budgeting analysis can be calculated? incremental cost, financing cost, tax shield from CCA incremental cost, additional working capital, tax shield from CCA, financing cost incremental cost, additional working capital incremental cost, additional working capital, tax shield from CCA incremental cost, tax shield from CCA
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