Maple Syrup Food is considering a six-year expansion project that requires an initial investment of $350,000 for the purchase of a new capital asset with a CCA rate of 20 percent.The costs to install the asset are $25,000.The projected annual sales revenue and costs are $200,000 and $90,000 per year,respectively.The appropriate discount rate is 10 percent.The firm's marginal tax rate is 40 percent.What is the fourth year CCA expense?

Question

Quizplus · Accepted Answer

CCA₄ = $(350,000 + 25,000)*(1 - 20%/2)*(1 - 20%)²*20% = $43,200

Maple Syrup Food Is Considering a Six-Year Expansion Project That