Spherical Manufacturing recently spent $$15$ million to purchase some equipment used in the manufacture of disk drives. This equipment has a CCA rate of $25\%$ and$$Spherical$\text{'}$s marginal corporate tax rate is $32\%.$

a$.$ What are the annual CCA deductions associated with this equipment for the first five$$years$?$

b$.$ What are the annual CCA tax shields for the first five$$years$?$

c$.$ What is the present value of the first five CCA tax shields if the appropriate discount rate is

$12\%$ per$$year$?$

d$.$ What is the present value of all the CCA tax shields assuming the equiment is never sold and the appropriate discount rate is

$12\%$ per$$year$?$

e$.$ How might your answer to part$($d$)$ change if Spherical anticipates that its marginal corporate tax rate will increase substantially over the next five$$years$?$

a$.$ What are the annual CCA deductions associated with this equipment for the first five$$years$?$