Laurentide Resort Corporation is considering a seven-year project that requires an initial investment of $525,000 and generates annual after-tax operating cash flow of $225,000.The asset has a CCA rate of 30 percent and an expected salvage value of $65,000.The firm's marginal tax rate is 40 percent.What is the CCA tax savings for year 5?

Question

Quizplus · Accepted Answer

CCATS5 = $525,000*(1 - 30%/2)*(1 - 30%)³*30%*40% = $18,367.65

Laurentide Resort Corporation Is Considering a Seven-Year Project That Requires