A Piece of Equipment, Acquired in Year 1, Belongs to Class

question 165

Multiple Choice

A piece of equipment, acquired in Year 1, belongs to Class 7 with a maximum CCA rate of 15%. The income tax rate is 40%. The tax savings (before discounting) from the CCA tax shield were $2,830.50 for Year 3. The after-tax cost of capital is 10%.
-What is the approximate undepreciated capital cost (UCC) balance for the equipment at the beginning of Year 3?

• A) $7,076.
• B) $8,325.
• C) $31,450.
• D) $47.175.

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Definitions:

Cash Flow

The total amount of money being transferred into and out of a business, highlighting the company's operational efficiency and liquidity.

Stockholders

Individuals or entities that own shares in a corporation, giving them ownership interest in the company.

Millions

A numerical term referring to a count or value in the millions, often used in financial contexts to indicate quantities or sums.

Operating Cash Flow

An assessment of the cash income resulting from a company's standard operational processes.