Suppose a Machine That Costs $80,000 Has a Useful Life

question 28

Multiple Choice

Suppose a machine that costs $80,000 has a useful life of ten years.Also suppose that capital cost allowance (CCA) deduction on the machine is $8,000 in year 4.The tax rate is 40%.What would be the tax savings from the CCA tax shield in year 4?

• A) $4,800 outflow.
• B) $3,200 outflow.
• C) $3,200 inflow.
• D) $4,800 inflow.

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Definitions:

Bleed Nut

A component used in hydraulic and air systems to release air or fluid, ensuring the system functions efficiently without airlocks or pressure issues.

Displaced Fluid

Fluid that has been moved or forced out of its original position, especially in the context of mechanical systems or during processes like displacement pumping.

Air-over-hydraulic Brake System

A brake system that uses air pressure to actuate hydraulic brakes, combining elements of both air and hydraulic braking systems.

Pressure Bleeder

A device used in hydraulic systems to remove air bubbles by applying pressure to the fluid, ensuring proper operation and performance.