Your Firm Needs a Computerized Line-Boring Machine Which Costs $80,000

question 56

Multiple Choice

Your firm needs a computerized line-boring machine which costs $80,000, and requires $20,000 in maintenance for each year of its three year life. After three years, the salvage value will be zero. The machine falls into the Class 10 equipment category (CCA rate 30%) .

Assume a tax rate of 34% and a discount rate of 10%. Assume the machine can be sold for $10,000 at the end of year 1. Compute the present value of the pre-tax salvage value at the end of year 3.

• A) $10,000
• B) $7,513
• C) $6,600
• D) $8,616
• E) $9,678

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Definitions:

Important

Something of great significance or value.

Organisation Structures

Refers to the way in which a company or organization is arranged to aid in achieving its objectives, often categorizing departments and roles.

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The hierarchical structure within an organization that outlines authority and responsibility relationships.

Delegation

The act of assigning authority and responsibility to others to carry out specific activities while maintaining accountability for the outcome.