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
Q. Explain the benefit plan? Cafeteria Plan - A benefit plan maintained by an employer for benefit of the employees underwhich every participant has the opportunity to select t

A w ard of contract In previous sub section you learnt in what situations you can negotiate. Now let us discuss the procedure for awarding the contract. Below are the step

OTCEI-COMPOSITE INDEX The OTCEI index is a pure price index. The sum of the prices of all shares as of June, 1993 is in the denominator. The current prices are in the numerator

Q. Show the Costs of Investment in Receivables? Costs of Investment in Receivables: - When a firm sells goods or else services on credit it has to bear numerous types of costs.


Settlement of the Index Options Contract In the index options contract, the premium to be paid or to be received is calculated for each CM after netting the positions at the en

Question 1: "Good Governance is an ideal. To ensure sustainable development, actions must be taken to work towards this ideal with the aim of making it a reality." With ref

Federal Reserve System The central banking institution in the United States responsible for determining United States monetary strategy, including the setting of interest rates

er diagram

Problem There are two investment plans in the market whose details are given below based on which you need to decide which investment plan you need to select. Propose which inv