Which One of the Following Is the Correct Method for Computing

question 7

Multiple Choice

Which one of the following is the correct method for computing the net cash flow on the sale of a piece of equipment? (Assume that the equipment was the only asset in its CCA pool.)

• A) (Book value - selling price)(1 - Tc)
• B) (Book value - selling price)(Tc)
• C) (Selling price)(Tc)
• D) (Selling price - book value)(1 - Tc)
• E) (Selling price - book value)(Tc)

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Definitions:

Excise Tax

A tax applied to specific goods, services, or transactions, usually with the intent of discouraging their use or generating revenue.

Tax Per Unit

A specific tax levied on a product based on the number of units purchased, not the value of the purchase.

Efficiency Loss

The loss of economic efficiency that can occur when equilibrium for a good or a service is not achieved or is not achievable.