Calculate the total present value of the tax shield, Financial Management

Nortel is considering the purchase of a new  call routing system.  The system will cost $50M to purchase, an additional $7M to install, and will last for 30 years.  The CCA rate associated with the system is 6%, the firm's margin tax rate is 20%, and the firm's WACC is 9%. a.  Using Excel, create a CCA table, as in class for the 30 year life of the asset.  Assume that the asset is sold for its UCC at the end of year 30.

b.  Add a column that shows the value of the annual tax shield.

c.  Add a column that shows the PV of the annual tax shield.

d.  Calculate the total PV of the tax shield in Excel.

e.  Calculate the PV of the tax shield using the PVCCA formula.

Posted Date: 2/15/2013 7:36:42 AM | Location : United States







Related Discussions:- Calculate the total present value of the tax shield, Assignment Help, Ask Question on Calculate the total present value of the tax shield, Get Answer, Expert's Help, Calculate the total present value of the tax shield Discussions

Write discussion on Calculate the total present value of the tax shield
Your posts are moderated
Related Questions
applicability of operating cycle in poultry

Q. Evaluate of Risk-Adjusted Discount Rate? Illustration: - From the following date state which project is preferable: Year Project A Proj

QUESTION 1 Discuss the role and contribution of the procurement function in an organisation. QUESTION 2 Discuss the main objectives of purchasing negotiations. Compare

Given below are the cash flows of a project. Find out the net present value of the project. Cost of capital is 18% and initial investment is Rs. 2,00,000. Year Cash Flows (lakhs)

Current Assets:- Stock of Raw-Materials :- [(Cost of yearly consumption Of raw material)*{ (Average Inventory holding period (weeks/months))}/(52 weeks / 12 months)]=

What is the fastest way to be rich?

We have seen computation of present value using single discount rate. But the right way to value a cash flow of a bond is to use multiple discount rates, i.e valuing th

Putable bonds can be redeemed prior to maturity at the initiative of the bondholder. These bonds are more advantageous to the investors as they get an opportunity to re

a-ii, should i calculate the co-variance of the 30 securities?

A firm has net working capital of -$800. Long-term debt is $15,400, total assets are $24,800 and fixed assets are $19,100. What is the amount of the total liabilities.