David's company is considering the acquisition of machine which belongs to a class with CCA rate of 44%. The cost of the machine is $1,074,000. The expected economic life is 9 years. Salvage value is $148,000. The discount rate is 7.90% and the marginal tax rate is 30%. Assume the half-year rule applies. What is the CCA tax shield for year 2? a. $79,390 b. $251,316 c. $368,597 d. $264,634 e. $110,579
David's company is considering the acquisition of machine which belongs to a class with CCA rate of 44%. The cost of the machine is $1,074,000. The expected economic life is 9 years. Salvage value is $148,000. The discount rate is 7.90% and the marginal tax rate is 30%. Assume the half-year rule applies. What is the CCA tax shield for year 2? a. $79,390 b. $251,316 c. $368,597 d. $264,634 e. $110,579
Chapter10: Project Cash Flows And Risk
Section: Chapter Questions
Problem 5PROB
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