Your company purchases machinery for $90,000. The machinery has a CCA rate of 25%. You intend to sell the machinery in year 12 for a salvage value of $18,000. At the time of sale, you still anticipate having other assets in the class. The relevant tax rate is 35%. Company uses a 13% rate of return. Determine the present value of the incremental tax shields generated.
Your company purchases machinery for $90,000. The machinery has a CCA rate of 25%. You intend to sell the machinery in year 12 for a salvage value of $18,000. At the time of sale, you still anticipate having other assets in the class. The relevant tax rate is 35%. Company uses a 13% rate of return. Determine the present value of the incremental tax shields generated.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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