Question 17 There Are Circumstances Under Which the Corporation Tax Is Equivalent

question 25

Essay

Question 17
There are circumstances under which the corporation tax is equivalent to an economic profits tax.
-Return to Question 17 above.Suppose that we now know that the present value of depreciation allowances is 0.20.In addition,there is an investment tax credit of 0.10.How does this new information change your answer to Question 17? What effect does this new information have on the user cost of capital?

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Definitions:

Replacement Shipment

Sending out a new or additional shipment to replace defective or missing products originally dispatched.

Commercial Unit(s)

A standard of measure, quantity, or grade of goods that is treated as a whole for commercial purposes, especially in sale or lease transactions.

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Unique or scarce monetary coins which are collected for their historical, cultural, or investment value.

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