Layton Company is replacing an old delivery van with a new van. The following data relate to this investment decision:

The old van is in Class 10 with a maximum CCA rate of 30% and will last for six more years. The new van is also in Class 10 with a maximum CCA rate of 30%. The income tax rate is 40%, and the company's after-tax cost of capital is 10%.
-What is the approximate present value of the after-tax net savings in cash operating costs for all the years?

Question

Layton Company is replacing an old delivery van with a new van. The following data relate to this investment decision:

The old van is in Class 10 with a maximum CCA rate of 30% and will last for six more years. The new van is also in Class 10 with a maximum CCA rate of 30%. The income tax rate is 40%, and the company's after-tax cost of capital is 10%.
-What is the approximate present value of the after-tax net savings in cash operating costs for all the years?

Quizplus · Accepted Answer

The Answer of Layton Company is replacing an old delivery van with a new van. The following data relate to this investment decision:

The old van is in Class 10 with a maximum CCA rate of 30% and will last for six more years. The new van is also in Class 10 with a maximum CCA rate of 30%. The income tax rate is 40%, and the company's after-tax cost of capital is 10%.
-What is the approximate present value of the after-tax net savings in cash operating costs for all the years?

Layton Company Is Replacing an Old Delivery Van with a New