Alpine Company Is Analyzing Two Investment Projects: P and Q

Alpine Company is analyzing two investment projects: P and Q. The following data are available:



The computer equipment for Project P will have a total salvage value of $8,000 at end of eight years. It will belong to Class 10 with a 30% maximum CCA rate. At the end of eight years, the working capital for Project Q will be released for use elsewhere. The income tax rate is 30% and Alpine's after-tax cost of capital is 10%.
-What is the approximate present value of the tax savings (for all years) due to the CCA tax shield for Project P?

A) $29,228.
B) $30,068.
C) $30,908.
D) $31,500.

Correct Answer:

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