A Fixed Asset Costing $1,000,000 Is a Class 1 Asset

question 144

True/False

A fixed asset costing $1,000,000 is a Class 1 asset with a CCA rate of 4%. Using a 10% cost of capital and a 32% tax rate, the present value of the CCA tax shield is $87,273.

---

Definitions:

Aggregate Demand

Aggregate desire for goods and services within an economy at different price points, during a certain period.

Price Level

A measure of the average prices of goods and services in an economy at a specific time, often compared over time to assess inflation or deflation.

Equilibrium Output

The level of output where the aggregate supply equals aggregate demand, meaning there is no tendency for the economy to change size.

Short-Run Aggregate Supply

Shows the relationship between the price level and the quantity of goods and services that firms are willing and able to supply in the short term, holding some inputs fixed.