New Equipment Costs $675,000 and Is Expected to Last for fiVe

question 342

Multiple Choice

New equipment costs $675,000 and is expected to last for five years with no salvage value. During this time the company will use a 30% CCA rate. The new equipment will save $120,000 annually
Before taxes. If the company's required rate of return is 12%, determine the PVCCATS of the
Purchase. Assume a tax rate of 35%

• A) $159,710
• B) $169,710
• C) $179,710
• D) $189,710
• E) $199,710

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Definitions:

Portable CD Players

Compact disc players that are small and light enough to be carried around easily, allowing for music playback through headphones or external speakers.

Federal Income Tax

A charge imposed by the IRS on the yearly income of persons, companies, trusts, and other legal bodies.

Withheld

Amount of an employee's pay withheld by the employer for tax or other purposes.

Matched By Employer

Contributions made by an employer towards a benefit scheme (e.g., pension, health insurance) that match the contributions made by employees.