An Asset with a Purchase Cost of $256 422 and a CCA

question 2

Multiple Choice

An asset with a purchase cost of $256 422 and a CCA rate of 30% has a market value of $31 000 atthe end of its 8-year life. Assume this asset is the only asset in its class and the asset class is about tobe closed out. The company's tax rate is 30% and its cost of capital is 10%. What is the Present Value of the tax shield lost due to the Undepreciated Capital Cost (UCC) in this case?

• A) $401
• B) $221
• C) $375
• D) $298

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Definitions:

Factory Labor Costs

Expenses associated with employing workers in a manufacturing facility, including wages, benefits, and other related costs.

Pension Costs

Expenses related to retirement plans funded by an employer for the benefit of employees.

Vacation Pay

Compensation that employers must pay employees for their time off work, as determined by company policy or legal requirements.

Work In Process Inventory

The total value of unfinished goods that are in various stages of production within a company.