The Reduction in Taxes Made Possible by a Capital Cost

question 7

True/False

The reduction in taxes made possible by a capital cost allowance (CCA)tax shield equals the amount of the CCA deduction multiplied by the tax rate.

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Definitions:

Profit Before Income Tax

The earnings of a business before taking into account the deduction of income tax expenses, also known as pre-tax profit.

Percentage Increase

The ratio, often expressed as a percentage, by which a quantity grows over a specific period.

After-Tax Profit

The amount of net income left over after all taxes have been deducted from total revenue.

Sold Units

The total quantity of units of a product that have been sold during a specific period.