b. Cendrawasih Inc. is considering replacing the equipment it uses to produce crayons.The equipment would cost RM1.37 million, have a 12-year life, and lowermanufacturing costs by an estimated RM304,000 a year. The equipment will bedepreciated using straight-line depreciation to a book value of zero. The requiredrate of return is 15 percent and the tax rate is 35 percent. Determine the net incomefrom this proposed project.

Net income refers to the level of income a project generates after deducting all the expenses…

Answered: b. Cendrawasih Inc. is considering…

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

Problem 1PS

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Please solve it as soon as possible! . Consider an asset with an initial cost of $100,000 and no salvage value. Compute the difference in the present value of the tax shields if CCA is calculated at 20% declining balance compared to if CCA is calculated using a five-year, straight line write off. For your calculation use 30% as the tax rate and 16% as the required return. (The half-year rule applies.) The difference, to the nearest dollar, is A S1.724 B $4,129 C S4.483 d. 59,517 e.$49,969

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