Eureka Company is considering replacing an old computer with a new computer. The following data relate to this investment decision:

The new computer will belong to Class 10 with a maximum CCA rate of 30%. The income tax rate is also 30%, and the company's after-tax cost of capital is 12%
-What is the approximate present value of the after-tax non-operating cash inflows that will occur in Year 6?
A) $1,064.
B) $1,773.
C) $2,077.
D) $2,535.

Question

Eureka Company is considering replacing an old computer with a new computer. The following data relate to this investment decision:

The new computer will belong to Class 10 with a maximum CCA rate of 30%. The income tax rate is also 30%, and the company's after-tax cost of capital is 12%
-What is the approximate present value of the after-tax non-operating cash inflows that will occur in Year 6?
A) $1,064. 
B) $1,773. 
C) $2,077. 
D) $2,535.

Quizplus · Accepted Answer

The Answer of Eureka Company is considering replacing an old computer with a new computer. The following data relate to this investment decision:

The new computer will belong to Class 10 with a maximum CCA rate of 30%. The income tax rate is also 30%, and the company's after-tax cost of capital is 12%
-What is the approximate present value of the after-tax non-operating cash inflows that will occur in Year 6?
A) $1,064. 
B) $1,773. 
C) $2,077. 
D) $2,535.

Eureka Company Is Considering Replacing an Old Computer with a New