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An Asset with a Purchase Cost of $96 422 and a CCA

question 133

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An asset with a purchase cost of $96 422 and a CCA rate of 40% has a market value of $4 000 at the end of its 10-year life. Assume this asset is the only asset in its class and the asset class is about to be closed out. The company's tax rate is 40% and its cost of capital is 6%. What is the Present Value of the tax shield lost due to the Undepreciated Capital Cost (UCC) in this case?


Definitions:

Negations

Logical operations that invert the truth value of a given statement, turning true statements into false and vice versa.

Truth Values

The values that denote the truthfulness of a statement, typically categorized as true or false.

Conjunction

A logical operator that links propositions together in such a way that the resulting statement is true only when both propositions are true.

Disjunction

A logical operation that results in true if at least one of its components is true.

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