Use the Information Below to Answer the Following Question(s)

question 185

Multiple Choice

Use the information below to answer the following question(s) .Albernie Ltd.purchased a CCA Class 8 (CCA rate of 20%) item of equipment for $90,000.The equipment was the only item in the Class 8 capital cost allowance pool.The equipment is expected to generate savings in the amount of $40,000 per year.The company uses straight-line depreciation, estimates a 3 year useful life with $20,000 salvage value for the new equipment.The tax rate is 35%, and Albernie has a required rate of return of 9.0%.
-What is the net present value of the Albernie Ltd.investment in equipment?

• A)$ 1,480
• B)$ (1,075)
• C)$ 89,799
• D)$ 8,357
• E)$ 9,382