Maritimes Toy Corporation (MTC)is Considering Investing in a Piece of New

question 126

Multiple Choice

Maritimes Toy Corporation (MTC) is considering investing in a piece of new equipment worth $50,000.The equipment will increase operating revenue by $10,000 per year for ten years.The equipment is expected to have no salvage value at the end of ten years, and capital cost allowance is claimed at 20% on a declining balance.The corporate tax rate is 38%, and MTC's opportunity cost of capital is 9%.Assume the asset class remains open after the asset is sold and the half-year rule applies in the first year.The project's NPV is approximately

• A)$2,352
• B)$3,321
• C)$26,739
• D)$27,709

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