A Consumer Values a Car at $525,000 and a Producer

question 34

Multiple Choice

A consumer values a car at $525,000 and a producer values the same car at $485,000.If sales tax is 8% and is levied on the buyer,then the buyers top dollar price is

• A)$525,000
• B)$523,800
• C)$485,000
• D)$486,111

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary by income level, type of income, or legal entity.

CCA Tax Shield

A deduction that Canadian businesses can claim for the depreciation of tangible property, reducing taxable income.

After-Tax Annual Lease Payment

The amount of lease payments due each year after accounting for the tax effects.

After-Tax Discount Rate

The discount rate after adjusting for taxes, used to evaluate investments and their future cash flows after tax implications.