Machine X costs $248,751 and has annual operating and maintenance costs of $9,980. Machine Y costs...

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Mechanical Engineering

Machine X costs $248,751 and has annual operating andmaintenance costs of $9,980. Machine Y costs $264,500 and hasannual operating and maintenance cost of $5,120. Both machines areClass 39, which specifies a CCA rate of 25%. The company needs themachines for 11 years, and at the end of year 11 machine X can besold for $12,257 and machine Y can be sold for 13,033. TheCompany's MARR is 10%, and its marginal tax rate is 35%. Do anafter-tax analysis to determine which machine should be chosen.

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4.0 Ratings (439 Votes)

Capital Cost Allowance is CCA is a yearly deduction in theIncome Tax Code that can be claimed on depreciable assets This isapplied on the book value of asset over the expense period usingdeclining balance methodThe depreciation is calculated as followsDepreciation per annum Net Book Value See Answer

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