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Homework answers / question archive / ABC Co is considering replacing the equipment it uses to produce tents
ABC Co is considering replacing the equipment it uses to produce tents. The equipment would cost $1.5 million and lower manufacturing costs by an estimated $215,000 a year. The equipment will belong in a 25% CCA class and has a five year life. The required rate of return is 13% and the tax rate is 34%. The annual after-tax cost reduction for the project is $187,500 $63.750 $102,000 X $73,100 141,900 Question 28 0 / 1 point ABC Co is considering replacing the equipment it uses to produce tents. The equipment would cost $1.5 million and lower manufacturing costs by an estimated $215,000 a year. The equipment will belong in a 25% CCA class and has a five year life. The required rate of return is 13% and the tax rate is 34%. The CCA tax shield for year 1 is rate $63,750 dep xtax $141,900 $187,500 $102,000 * $73,100
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