Manosteel Ltd Is Considering the Purchase of a New Machine

question 53

Multiple Choice

Manosteel Ltd is considering the purchase of a new machine for $100,000. It is to be depreciated on a straight-line basis and is estimated to have no residual value at the end of a useful life of 10 years. The tax rate is 30 per cent. What will be the annual cash tax saving in relation to depreciation expense?

• A) $100
• B) $3,000
• C) $10,000
• D) $300

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Definitions:

Labor Demand Curve

Graphical representation showing the relationship between the quantity of labor a firm demands and the wage rate, with other factors being constant.

Unit-elastic

Unit-elastic describes a situation where a change in price leads to an equivalent proportional change in quantity demanded or supplied, resulting in no revenue change for the seller.

Wage Increase

An upward adjustment in the amount of earnings a worker receives for their labor.

Elasticity of Resource Demand

A measure of how the quantity demanded of a resource changes in response to a change in price.