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urgent thanks. please don't do it with excel You are considering investing in a piece of equipment to implement a cost-cutting proposal. The before-tax cost
urgent thanks. please don't do it with excel
You are considering investing in a piece of equipment to implement a cost-cutting proposal. The before-tax cost reduction is expected to equal $41.67 for each of the three years of the project's life. The equipment has an initial cost of $125 and belongs in a 20% CCA class. Assume a 34% tax bracket, a discount rate of 15%, and a salvage value of zero. a. What is the value of the annual depreciation tax shield for year 2 of the project? (4 Marks) b. What is the annual after-tax cost reduction for the project? (2 Marks) c. If the equipment is sold to another company at the end of year 3 for $20, what is the NPV? (7 Marks) d. If the equipment is sold to another company at the end of year 3 for $20, what is the PI? (2 marks) Step by Step Solution
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