Ramsey Construction is considering the purchase of a backhoe for £300,000. The expected life is 4 years. The company uses the straight-line method of depreciation with no mid-year convention. The company's tax rate is 34 per cent. The present value factors at the company's cost of capital are as follows: Required:
Determine the present value of the tax shield (i.e. tax benefits) assuming that capital allowances are based on the straight-line method. Present your answer in good format.

Question

Ramsey Construction is considering the purchase of a backhoe for £300,000. The expected life is 4 years. The company uses the straight-line method of depreciation with no mid-year convention. The company's tax rate is 34 per cent. The present value factors at the company's cost of capital are as follows:  Required:
Determine the present value of the tax shield (i.e. tax benefits) assuming that capital allowances are based on the straight-line method. Present your answer in good format.

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The Answer of Ramsey Construction is considering the purchase of a backhoe for £300,000. The expected life is 4 years. The company uses the straight-line method of depreciation with no mid-year convention. The company's tax rate is 34 per cent. The present value factors at the company's cost of capital are as follows:  Required:
Determine the present value of the tax shield (i.e. tax benefits) assuming that capital allowances are based on the straight-line method. Present your answer in good format.

Ramsey Construction Is Considering the Purchase of a Backhoe for £300,000