Eureka Company Is Considering Replacing an Old Computer with a New

question 59

Multiple Choice

Eureka Company is considering replacing an old computer with a new computer. The following data relate to this investment decision:



The new computer will belong to Class 10 with a maximum CCA rate of 30%. The income tax rate is also 30%, and the company's after-tax cost of capital is 12%
-What is the approximate present value of the tax savings for all years because of the CCA tax shield?

• A) $7,786.
• B) $6,975.
• C) $8,245.
• D) $8,438.

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Definitions:

Internet

A vast network of computers that is globally connected, facilitating information sharing, communication, and access to web resources.

Off-price Retailers

Retail stores that sell branded goods at lower prices than those typically charged by departmental stores or traditional retailers, often due to overproduction or closeouts.

Discount Prices

Lower than the standard price, often used as a promotional strategy to increase sales or clear out inventory.

Omnichannel Strategy

Involves integrating multiple methods of shopping available to consumers, such as online, in-store, and through mobile apps, to provide a seamless customer experience.