A Company Purchases Equipment to Be Used in Business Operations

question 5

Essay

A company purchases equipment to be used in business operations for $4,800,000.The equipment has a CCA rate of 45%.You intend to sell the equipment in year 5 for a salvage value of $95,000.At the time of sale, you still anticipate having other assets in the class.Tax rate is 40%.Company uses a 10% rate of return.Determine the present value of the incremental tax shields generated.

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Definitions:

Smooth Muscle

A type of muscle found in the walls of internal organs and blood vessels, controlled involuntarily.

ACSM

The American College of Sports Medicine, an organization focused on sports medicine and exercise science.

Reps

Short for repetitions, the number of times an exercise movement is performed in a set during strength training.

Voluntary Muscles

Muscles whose movement can be consciously controlled by the individual, involved in activities such as walking or talking.