A Construction Company Spends $1

question 79

Multiple Choice

A construction company spends $1.4 million to purchase a new crane.The crane will have a capital cost allowance (CCA) rate of 25%.If the opportunity cost of capital is 7%,and the company's marginal tax rate is 20%,what is the present value of the CCA tax shield?

• A)$70,000
• B)$350,000
• C)$211,595
• D)$250,779
• E)$218,750

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Definitions:

Homeostasis

The process through which living organisms naturally regulate themselves to keep stable while adapting to the best conditions for their survival.

Senescence

The biological process of aging, characterized by a gradual decline in the functional capacity of an organism's cells, tissues, and organs.

Diathesis

An inclination or susceptibility toward the development of mental health conditions, shaped by genetic, biological, or external influences.

Homeostatic Adjustment

The process by which living organisms regulate their internal environment to maintain stable, life-sustaining conditions.