Your Classmates from the University of Chicago Are Planning to Go

question 118

Multiple Choice

Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfares are $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfares are $450. If you do not use the frequent-flyer coupon to fly to Miami, should you go to Miami?

• A)Yes, your benefit is more than your cost.
• B)No, your benefit is less than your cost.
• C)Yes, your benefit is equal to your cost.
• D)No, because there are no benefits in the trip.

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Definitions:

Project Analysis

The process of evaluating the viability, stability, and profitability of a project or endeavor before committing resources to it.

Capital Cost Allowance

A tax deduction in Canada that allows businesses to write off the cost of physical assets over time.

Canadian Tax Law

The laws and regulations that define how taxes are calculated, collected, and enforced in Canada, covering income, corporate, sales taxes, and more.

Depreciation Method

An accounting technique used to allocate the cost of a tangible asset over its useful life.