A Machine Is Purchased for $500,000 and Is Used Through

question 17

Multiple Choice

A machine is purchased for $500,000 and is used through the end of Year 2.The machine falls under asset class 43 with a capital cost allowance (CCA) rate of 30%.At the end of Year 2,the machine is sold for $75,000.What is the present value of the overall CCA tax shields if the firm's marginal tax rate is 40% and its cost of capital is 5%?

• A)$232,128
• B)$201,334
• C)$175,997
• D)$167,347
• E)$144,023

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