A new machine will cost $1,800,000.It is in a CCA class pool that uses a declining balance rate of 30%.The company's tax rate is 38% and it requires a 9% rate of return on investments.Calculate the present value of the the tax shield the first year assuming the savings occur at year end.
A)$153,577.98
B)$188,256.88
C)$167,400.00
D)$94,128.44
E)$102,600.00

Question

Quizplus · Accepted Answer

The Answer of A new machine will cost $1,800,000.It is in a CCA class pool that uses a declining balance rate of 30%.The company's tax rate is 38% and it requires a 9% rate of return on investments.Calculate the present value of the the tax shield the first year assuming the savings occur at year end.
A)$153,577.98
B)$188,256.88
C)$167,400.00
D)$94,128.44
E)$102,600.00

A New Machine Will Cost $1,800,000