A New Machine Will Cost $500,000

question 33

Multiple Choice

A new machine will cost $500,000.It is in a CCA class pool that uses a declining balance rate of 30%.The company's tax rate is 40% and it requires a 15% rate of return on investments.Calculate the present value of the the tax shield the first year assuming the savings occur at year end.

• A)$126,998.42
• B)$78,214.34
• C)$52,173.91
• D)$119,765.22
• E)$26,086.96