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:

Falsifiability

A principle in the philosophy of science that suggests a statement or theory must be capable of being proven false as a criterion for determining its scientific validity.

Circularity

The property of being circular or having a circular logic, often referring to arguments or reasoning where the conclusion is assumed in one of the premises.

Inter-rater Reliability

A measure of consistency between different observers or raters in the assessment of the same phenomenon.

Consistency

This term often refers to the characteristic of behaving in a similar manner over time, showing reliability in actions, values, or methods.