A company purchases equipment to be used in business operations for $4,800,000.The equipment has a CCA rate of 45%.You intend to sell the equipment in year 5 for a salvage value of $95,000.At the time of sale, you still anticipate having other assets in the class.Tax rate is 40%.Company uses a 10% rate of return.Determine the present value of the incremental tax shields generated.

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The Answer of A company purchases equipment to be used in business operations for $4,800,000.The equipment has a CCA rate of 45%.You intend to sell the equipment in year 5 for a salvage value of $95,000.At the time of sale, you still anticipate having other assets in the class.Tax rate is 40%.Company uses a 10% rate of return.Determine the present value of the incremental tax shields generated.

A Company Purchases Equipment to Be Used in Business Operations