question 20

Albernie LTD purchase a CCA class 8 (CCA rate of 20%) item of equipment for $90000 the equipment was the only item in the class 8 capital cost allowance pool the equipment is expected to generate savings in the amount of $40000 per year the company uses straight line depreciation estimates a 3 year useful life with $20000 salvage value for the new equipment the tax rate is 35% and albernie has a required rate of return of 9%

1-what is the net present value of the albernie ltd investment in equipment ?

1-$1480

2-$9382

3-$(1075)

4-$89799

5-$83572-2-what is present value of the after tax savings that albernie ltd expects during the useful life of the equipment ?

1-$101252

2-$42188

3-$50370

4-$65814

5-$81257