Calculate the total pv of the tax shield, Basic Statistics

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: 3/1/2013 12:04:50 AM | Location : United States






Your posts are moderated
Related Questions
How do you prepare the budget balance sheet?

I would just like the formula to find the y-axis of a centroid.

how effect changes in prices to a financial statement?

Find a statistics study (from a newspaper article, journal, research study, or online article) and describe the five-step process of the study. (Hint: it may help to identify the f

A manufacturer of VCRs plans to purchase a particular component from suppliers A, B and C. 30% of the components are to be purchased from A, 20% from B and 50% from C. In the past,

how do I find the cost of inventory?

A. Use the inequality derived for part C question 3; to obtain an inequality required x *CD  = 1 to remain stable against DD invaders. Also draw the ROC diagram discussed in class

ANOVA 1 and 2 way, t and f-tests 1,2 or more means... standard deviations known/unknown. I have a project where I must use these tests, but I''m not clear on the when and how.

what are the different types of transfer pricing?

A.  A computer rejuvenation facility receives systems from the fleet at 24 systems/day (assume this is a Poisson process).  It takes the triage function 30 minutes (assumed exponen