Taxes and net percent value calculations , multipliers and multiple choice question

There is no inflation. It is currently Year 0. You work for a large engineering services finm Your firm's before-tax MARR is 10% per year. Your firm corporate tax rate is t 25% Your firm buys $10,000 ofcomputer hardware, a Class depreciable asset. Class 8 assets have a CRA-set depreciation rate of d 30% per year. 's after-tax MARR is 7.5% per year. Your firm's .In Year 0, your firm pays $10,000 for the computer hardware. From Year 1 to Year 10 (inclusive), the hardware will provide savings of $5,000 per year. In Year 10, your firm expects to sell (salvage) the used hardware for $2,000. . Your firm has many other Class 8 assets, so there is no need to consider terminal loss or recapture. a. (5 marks) Calculate the after-tax net present value of this investment. Show your work After-Tax Net Present Value: $ Work b. (5 marks) The computer hard who works for the municipal government, urges your firm N ware in part a. would be used mostly for financial calculations. A friend of yours, OT to buy the hardware, saying: "You should hire local accountants to do the calculations by hand, instead of buying a computer to do them. Tha way, you'll be creating jobs, instead of taking them away via mechanization. Since spend most of their income right here in Victoria, the multiplier effect will be huge, and the positive economic impact will more than make up for the additional costs. Don't you want to help the city?" the accountants are local and Here are five possible counter-arguments (yes, I know many obvious and important ones are missing) A. There's no guarantee that any jobs would be created. Jobs would only be created by your friend's proposal if the accountants you hired would have been otherwise unemployed. B. There are important opportunity costs to having accountants do the calculations by hand. You're sacrificing any other work the accountants could be doing, and other work the firm could be doing if it didn't have to wait for the slower manual calculations to finish C. The accountants may be local, but they work in the service sector. Because of that, even if the simple multiplier is large, the indirect effect would have the opposite sign of the direct effect, limiting the economic impact. D. If the accountants regularly buy imported goods, such as Italian suits and Swiss chocolates, the induced effect might mean that the local economic impact is negative, not positive. E. For the accountants, increased income from your firm is probably balanced out by lower income from other clients (since there are limited work hours in the day). The two effects will cancel out and the total multiplier effect will be negligible Which of the arguments above (A,B,C,D and E) are correct (or probably correct)? Correct or Probably Correct