Munir S/B has provided the following data concerning a proposed investment project: Initial investment.................. $861,000 Annual net cash receipts...... $271,000 Life of the project................. 5 years Salvage value...................... $129,000 The company's tax rate is 30%. For tax purposes, the straight line method will be used and capital allowances (CA)s will be claimed only over 3 years over the entire initial cost without any reduction for salvage value. The company uses a discount rate of 11%. Required: (i)Calculate the annual CAs for years 1-3
Munir S/B has provided the following data concerning a proposed investment project: Initial investment.................. $861,000 Annual net cash receipts...... $271,000 Life of the project................. 5 years Salvage value...................... $129,000 The company's tax rate is 30%. For tax purposes, the straight line method will be used and capital allowances (CA)s will be claimed only over 3 years over the entire initial cost without any reduction for salvage value. The company uses a discount rate of 11%. Required: (i)Calculate the annual CAs for years 1-3
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Munir S/B has provided the following data concerning a proposed investment project:
|
|
Initial investment.................. |
$861,000 |
|
|
Annual net cash receipts...... |
$271,000 |
|
|
Life of the project................. |
5 years |
|
|
Salvage value...................... |
$129,000 |
The company's tax rate is 30%. For tax purposes, the
Required:
(i)Calculate the annual CAs for years 1-3
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