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Sphencal Manufacturing recently spent $14 million to purchase some oquipment used in the manufacture of disk drives. This equipment has a cCA rate of 25%
Sphencal Manufacturing recently spent $14 million to purchase some oquipment used in the manufacture of disk drives. This equipment has a cCA rate of 25% and Sphericaili narginal corporate tax nate is 30%. a. What are the annual CCA deductions associated with this equipment for the first five years? b. What are the annual CCA tax shieids for the first five years? c. What is the present value of the frrt five CCA tax ahweldo if the appropriate disoount rate is 12% per year? d. What is the presert value of all the CCA tax ahilelds aisuming the ecuiment is never sold and the appecoriate cliscount rate is 12% per year? e. How might your answer to part (d) change if Sphericil anticipotes that its marginal corporate tax fate will incrase nubstantially over the nout five years? a. What are the annual CCA deductions atsociated with this equipment for the first five years? The CCA deduction for year 1 is 1 (Round io the nearest dollar)
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