Use the Following Information to Answer the Next Question(s)

question 28

Multiple Choice

Use the following information to answer the next question(s) .
Sunny Flowers is considering the purchase of a small business that costs $500,000. Sunny plans to sell stock valued at $250,000. The stock would pay dividends of $20,000 per year. Sunny would borrow the remaining $250,000 from a local bank at 12 percent interest.
The business is expected to generate annual cash inflows of $80,000. Duane plans to operate the business for 15 years and then turn it over to his son.
-Miller Manufacturing has acquired a new parcel van to transport packages from the airport to its sales offices for $20,000. The van is a class 10 item which has a capital cost allowance rate of 30%. The company plans to use the van for five years and then sell it for an expected salvage value of $4,000. The capital cost allowance for the first year would be

• A) $3,000.
• B) $6,000.
• C) $5,100.
• D) $3,500.