Delta Corporation is considering an investment of $400,000 in a new machine, which belongs to asset class 43 with a CCA rate of 30%.The machine is not the only asset in the asset class.The firm's effective tax rate is 40%.The company has the following estimates:

a)Determine the NPV for each scenario.
b)Would you recommend the company to undertake the project if each scenario is equally likely? Why?

Question

Delta Corporation is considering an investment of $400,000 in a new machine, which belongs to asset class 43 with a CCA rate of 30%.The machine is not the only asset in the asset class.The firm's effective tax rate is 40%.The company has the following estimates:
  
a)Determine the NPV for each scenario.
b)Would you recommend the company to undertake the project if each scenario is equally likely? Why?

Quizplus · Accepted Answer

The Answer of Delta Corporation is considering an investment of $400,000 in a new machine, which belongs to asset class 43 with a CCA rate of 30%.The machine is not the only asset in the asset class.The firm's effective tax rate is 40%.The company has the following estimates:
  
a)Determine the NPV for each scenario.
b)Would you recommend the company to undertake the project if each scenario is equally likely? Why?

Delta Corporation Is Considering an Investment of $400,000 in a New