Your fiRm Needs a Computerized Line-Boring Machine Which Costs $80,000

question 301

Multiple Choice

Your firm needs a computerized line-boring machine which costs $80,000, and requires $20,000 in maintenance for each year of its three year life. After three years, the salvage value will be zero.
The machine falls into the Class 10 equipment category (CCA rate 30%) . Assume a tax rate of 34%
And a discount rate of 10%.
Compute the annual after-tax maintenance cost.

• A) $10,000
• B) $12,250
• C) $13,200
• D) $15,250
• E) $27,200

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