Eureka Company Is Considering Replacing an Old Computer with a New

question 168

Multiple Choice

Eureka Company is considering replacing an old computer with a new computer. The following data relate to this investment decision:



The new computer will belong to Class 10 with a maximum CCA rate of 30%. The income tax rate is also 30%, and the company's after-tax cost of capital is 12%
-What is the approximate present value of the after-tax non-operating cash inflows that will occur in Year 6?

• A) $1,064.
• B) $1,773.
• C) $2,077.
• D) $2,535.

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Definitions:

Fund

A collection of money set aside for a specific purpose or invested to generate income.

Exist

To have actual being or reality.

Value

The importance, worth, or usefulness of something.

Instrument

An instrument in legal and financial contexts refers to a formal document that records a legal right, obligation, or transaction, such as a contract, will, promissory note, or security.