(Solution) 14) Parappapa Is Considering An Eight-year Expansion Project That Requires An Initial Investment Of $423,000 For The Purchase Of A New Capital Asset... | Snapessays.com


(Solution) 14) Parappapa is considering an eight-year expansion project that requires an initial investment of $423,000 for the purchase of a new capital asset...


14) Parappapa is considering an eight-year expansion project that requires an initial investment of $423,000 for the purchase of a new capital asset with a CCA rate of 30 percent. The costs to install the asset are $27,000. The projected annual sales revenue and costs are $1.2M and

 

$700,000 per year, respectively. The appropriate discount rate is 15 percent. The firm’s

 

marginal tax rate is 35 percent. What is the fourth year CCA expense?

 

 

a) $46,305.0

 

b) $56,227.5

 

c) $131,197.5

 

d) $154,351.0

 

e) $187,425.0

 


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This question was answered on: May 23, 2022

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