A Restaurant Invests $240,000 in a New Food Truck for Mobile

question 107

Multiple Choice

A restaurant invests $240,000 in a new food truck for mobile lunch sales.The truck will have a capital cost allowance (CCA) rate of 20%.If the opportunity cost of capital is 8.5%,and the restaurant's marginal tax rate is 30%,what is the present value of the CCA tax shield?

• A)$48,547
• B)$48,000
• C)$50,526
• D)$35,938
• E)$14,400

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Definitions:

Palpation

The technique of examining parts of the body by touch, especially for the purpose of diagnosing disease or illness.

Lymph Nodes

Small, bean-shaped glands part of the lymphatic system, which filter lymph fluid and help the body fight infections.

Fever

An increase in body temperature above the normal range, usually indicating an underlying infection or disease.

Palpation

A method in physical examination where the hands are used to feel body parts to detect abnormalities.