I dont get it. How did they get that answer. which formula did they use to get cca in year 1 and cca in year 2. Please explain it well
Since Project A has higher IRR, the NPV of project A is:Project A: CFO = -$300,000, CF1=$150,000, CF2=$150,000, CF3=$150,000, 1=10%Then Solve for NPV= $73,027.80Please use the following Information to answer questions 11, 12 and 13.Johnson & Johnson acquires a depreciable asset at a cost of $730,000 that has a useful life o5 years and a salvage value of $100,000. The company has a tax rate of 30% and the assetfalls into a 12% CCA class. The acquisition of the asset would result in annual pre-tax savingsPage 5 | 18ADMS 3530 3.0FINAL EXAM, TYPE Xof $275,000 in each of the 5 years starting in year 1. The acquisition of the asset requires anFALL 2016investment in working capital of $32,500 at t=0 which is fully recovered in year 5. The companyis required to earn a minimum rate of return of 10%.11. What is the CCA in Year 2?A) $186, 150B) $ 87,600C) $ 43,800D) $ 77,088E) $ 82,344Solution: ECCA in Year 1 = $730,000 * .12 * 1/2 = $43,800CCA in Year 2 = ($730,000 – $43,800) * .12 = $82, 34412. What is the Present Value of CCA Tax Shield?aciandMacBook Air
