ABC Inc. purchased machinery for $600861 which is used through the end of Year 2. The machine falls under the 31% asset class. At the end of Year 2, the machine is sold for $62313. What is the present value of the total CCA tax shields over 2 years if the firm's tax rate is 40% and its cost of capital is 5%?

ABC Inc. purchased machinery for $600861 which is used through the end of Year 2. The machine falls under the 31% asset class. At the end of Year 2, the machine is sold for $62313. What is the present value of the total CCA tax shields over 2 years if the firm's tax rate is 40% and its cost of capital is 5%?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section2.A: Taxes

Problem 7P

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