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What is the project cca tax shield in year

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Reference no: EM133061683

You are considering a project that requires $80,000 investment in fixed assets and $30,000 upfront investment in net working capital. Assume the salvage value of fixed assets is 0. The project is expected to produce sales of $213,000 with associated costs of $97,000. The project has a 3-year life. Fixed assets belong to a 10% CCA class. The tax rate is 35%, and the discount rate is 12%.

-What is the project's CCA tax shield in year 1?

-What is the project's after-tax operating cash flow in year 1, ignoring the CCA tax shield?

Reference no: EM133061683

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