A company is considering a 3-year project that would require an asset with an installed...
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Accounting
A company is considering a 3-year project that would require an asset with an installed cost of $1,000,000. The asset qualifies for a 20% CCA rate and is expected to have no salvage value at the end of the 3 years. The project would require a $120,000 up-front investment in net working capital and is expected to generate annual before-tax cost savings of $350,000. Assume the company requires a return of 11% and has a tax rate of 15%. What is the present value of the CCA tax shield?
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