Nuff Folding Box Company, Inc

question 24

Multiple Choice

Nuff Folding Box Company, Inc. is considering purchasing a new glueing machine. The glueing machine costs $50,000 and requires installation costs of $2,500. This outlay would be partially offset by the sale of an existing gluer. The existing gluer originally cost $10,000 and is four years old. It is being depreciated using the Class 10 CCA rate of 30% and can currently be sold for $15,000. The existing gluer has a remaining useful life of five years. If held until year 5, the existing machine's market value would be zero. Over its five-year life, the new machine should reduce operating costs (excluding depreciation) by
$17,000 per year. The new machine will be depreciated using the Class 10 CCA rate of 30%. The firm has a 12 percent cost of
capital and a 40 percent tax on ordinary income and capital gains.

-The present value of the project's five-year incremental after-tax operating income is___________

• A) $32,820
• B) $41,421
• C) $36,769
• D) $44,820

---

Definitions:

Sugar

A sweet-tasting, crystalline substance, primarily sucrose, obtained from various plants like sugarcane and sugar beet, widely used as a sweetener in food and drinks.

Indian Slaves

Indian slaves refer to the indigenous peoples of the Americas who were enslaved by European colonists through conquest, trade, or raiding from the early colonial period onwards.

African Slaves

Individuals of African descent who were forcibly brought to and held in captivity in various parts of the world, notably in the Americas, through the transatlantic slave trade.