Smidt and Vas is an infrastructure investment firm that is currently analyzing a new project which will generate an annual before tax operating cash flow of $500,000. The capex for the project is $4M, the firm has a tax rate of 25% and the CCA depreciation rate for this asset is 30%. Smidt and Vas has a cost of capital of 10%.

Q7: What is the projects year 3 CCA expense?

A $714,000

B $255,000

C $1,666,000

D $136,364

What is the projects year 4 CCA tax shield?

A $150,000

B $2,380,000

C $499,800

D $124,950

What is the projects year 2 PV of CCA tax shield?

A $600,000

B $210,744

C $3,400,000

D $134,110