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Use the following data for Questions 7, 8 and 9. Smidt and Vas is an infrastructure investment firm that is currently analyzing a new project
Use the following data for Questions 7, 8 and 9. 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%. What is the project's year 3 CCA expense? OB. $255,000 A. $714,000 C. $1,666,000 D. $136,364 QUESTION : What is the project's year 4 CCA tax shield? B. $2,380,000 C. $499,800 A. $150,000 O D. $124,950 QUESTION 9 What is the project's year 2 PV of CCA tax shield? OB. $210.744 D. $134,110 O A. $600,000 C. $3,400,000
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