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You purchase equipment for $100,000 and it costs $10,000 to have it delivered and installed Based on past information, you believe that you can sell

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You purchase equipment for $100,000 and it costs $10,000 to have it delivered and installed Based on past information, you believe that you can sell the equipment for $17,000 when you are done with it in 6 years. The company's marginal tax rate is 40%. If the applicable CCA rate is 20% and the required return on this project is 10%, a) what is the present value of the CCA tax shield? PV tax shield on CCA IdT 1+0.5r SdT. 1 X d+r 1+r d+r (1+r)" -X b) What is the relation between Tax and CCA and why is it so important for computation of NPV and Income Statement

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