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Shepard Industries is evaluating a proposal to expand its current distribution facilities. Management has projected the project will produce the following cash flows for the
Shepard Industries is evaluating a proposal to expand its current distribution facilities. Management has projected the project will produce the following cash flows for the first two years (in millions).
Year | 1 | 2 |
---|---|---|
Revenues | 1200 | 1400 |
Operating expenses | 450 | 525 |
Capital Cost Allowance | 240 | 280 |
Increase in working capital | 60 | 70 |
Capital expenditures | 300 | 350 |
Marginal corporate tax rate | 30% | 30% |
The CCA tax shield for Shepard Industries project in year 1 is closest to:
A. $168
B. $84
C. $72
D. $100
E. $96
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