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Lucky Co is planning to purchase a machine for $100,000 on 31 December 20X1, the last day of its accounting period. The company can claim tax-allowable depreciation of 25% reducing balance for each full year the machine is in operation, making the claim on the last day of the relevant accounting period. Tax is payable with a one year time delay, and the tax rate is 30% To the nearest $100 what is the present value of the cash flows relating to the tax allowance on the machine during the first five years the machine is in operation? Lucky's cost of capital is 10%. A. $18,300. B. $50,900. C. $60,900. D. $15,300. |