A road building company is purchasing an excavator for $500,000 The corporate tax rate is 45% and the expected after-tax rate of return is 12% What would be the present value of the future tax savings realized from capital cost allowance (CCA)? (ignore the accelerated CCA rule.) & Exit
A road building company is purchasing an excavator for $500,000 The corporate tax rate is 45% and the expected after-tax rate of return is 12% What would be the present value of the future tax savings realized from capital cost allowance (CCA)? (ignore the accelerated CCA rule.) & Exit
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:A road building company is purchasing an excavator for $500,000 The corporate tax rate is 45% and the expected after-tax rate of return is
12% What would be the present value of the future tax savings realized from capital cost allowance (CCA)? (ignore the accelerated CCA
rule)
Multiple Choice
O
O
O
$339,286
$160,714
$75,000
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