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Unformatted text preview: sentence should be revised with the text in red: "Meanwhile, Firm B's managers anticipated selling another 150 units; therefore they calculated the average cost to produce the second group of 150 units and set their current-year price at this year's average cost plus a 50% mark-up." 12 526 Calculating Incremental Tax Cash Flows In the first line of the Present Value calculation, the cash flow should be “$400,000”, not “$40,000” 12 529 Loss of Tax Shield from the Disposal of Equipment The correct formula for Loss of Tax Shield is as follows: Loss of Tax Shield = Salvage value × Tax rate × CCA rate × 1 CCA rate + Required rate of return (1 + RRR) n...
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- Summer '11
- Net Present Value, tax shield, Shield CCA rate