Judson Industries is considering a new project. The project will initially require $749,000 for new ﬁxed assets, $238,000 for additional inventory, and $25,000 for additional accounts receivable.
Accounts payable is expected to increase by $70,001. The ﬁxed assets will belong in a 30% CCA
Class. At the end of the project, in four years' time, the ﬁxed assets can be sold for 40% of their
Original cost. The net working capital will return to its original level at the end of the project. The
Project is expected to generate annual sales of $944,000 with related cash expenses of $620,001.
The tax rate is 35% and the required rate of return is 14%.
What is the amount of the present value of the CCA tax shield for this project?

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The Answer of Judson Industries is considering a new project. The project will initially require $749,000 for new ﬁxed assets, $238,000 for additional inventory, and $25,000 for additional accounts receivable.
Accounts payable is expected to increase by $70,001. The ﬁxed assets will belong in a 30% CCA
Class. At the end of the project, in four years' time, the ﬁxed assets can be sold for 40% of their
Original cost. The net working capital will return to its original level at the end of the project. The
Project is expected to generate annual sales of $944,000 with related cash expenses of $620,001.
The tax rate is 35% and the required rate of return is 14%.
What is the amount of the present value of the CCA tax shield for this project?

Judson Industries Is Considering a New Project