Dan Works for ElekTek, a Firm Producing Sophisticated Electronic Equipment

question 324

Multiple Choice

Dan works for ElekTek, a firm producing sophisticated electronic equipment used in state-of-the-art security systems. Dan is happy to see that the value of ElekTek's stock has reached $47 per share, because certain employees (including Dan) have the opportunity to buy a given number of shares of its stock for $30 per share for the next year regardless of how high the market price goes. Elec Tek is offering some employees a:

• A)salary pay system.
• B)commission pay plan.
• C)rolling rate system.
• D)income averaging plan.

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Definitions:

Tax Rate

The proportionality of income subject to tax for either a person or a business.

Discount Rate

This refers to the interest rate applied for computing the present value of forthcoming cash flows in the context of discounted cash flow analysis.

Present Value

The current valuation of future monetary sums or cash flow streams, using a given return rate for discounting.

Capital Cost Allowance (CCA)

A taxable expense in Canada that a business can claim for the depreciation of tangible property.