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

question 32

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%.The opportunity cost of capital is 8.5%,and the restaurant's marginal tax rate is 30%.If the company sells the truck at the end of 5 years for $120,000,what is the present value of the lost CCA tax shields from the sale of the asset?

• A)$12,437
• B)$16,801
• C)$33,602
• D)$35,938
• E)$24,874

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Definitions:

Responsiveness

A metric that measures the firm’s ability and willingness to provide fast service, answer customer inquiries, and resolve problems.

Empowerment

Giving employees permission to make decisions and take action on their own to help customers.

Predictive Modeling

The process of using data mining and probability to forecast outcomes. Each model is made up of a number of predictors, which are variables that are likely to influence future results.

Customer Service Activities

Tasks or efforts undertaken by a company to ensure customer satisfaction and handle inquiries, complaints, or assistance requests effectively.