Jimbob Co.has purchased new equipment at a cost of $200,000.The business wishes to consider in its capital budgeting analysis the impact of the tax shield resulting from this purchase.The capital cost allowance rate for this type of asset is 30% subject to the half year rule in the year of purchase.The applicable annual corporate tax rate is 40% and Jimbob Co.'s cost of capital is 10%.
Required:
What are the annual tax shield amounts to be used in net present value calculations for the first five years of the life of the equipment? (Round to even dollars)

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The Answer of Jimbob Co.has purchased new equipment at a cost of $200,000.The business wishes to consider in its capital budgeting analysis the impact of the tax shield resulting from this purchase.The capital cost allowance rate for this type of asset is 30% subject to the half year rule in the year of purchase.The applicable annual corporate tax rate is 40% and Jimbob Co.'s cost of capital is 10%.
Required:
What are the annual tax shield amounts to be used in net present value calculations for the first five years of the life of the equipment? (Round to even dollars)

Jimbob CoHas Purchased New Equipment at a Cost of $200,000