Jamestown Industries Is Contemplating the Acquisition of Some New Equipment

question 22

Multiple Choice

Jamestown Industries is contemplating the acquisition of some new equipment. The purchase price is $40,000. The equipment has a 4-year life after which time it will be worthless. The equipment belongs in a 35 percent CCA class. The equipment can be leased for $11,000 a year. The firm can borrow money at 7 percent and has a 35 percent tax rate. What is the amount of the depreciation tax shield in year 4?

• A) $1,708
• B) $2,075
• C) $2,400
• D) $2,964
• E) $3,112

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Definitions:

Motivating Action

Encouraging or provoking a specific response or behavior from the audience.

Task Assignments

Specific duties or responsibilities allocated to individuals or teams within a project or workplace setting.

Qualifications

Credentials, skills, or educational achievements that make an individual suitable for a specific job or task.

Tone

Refers to the attitude or approach conveyed by the words and style in written or spoken communication.