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

question 44

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:

South

A region in the United States characterized by its unique cultural, historical, and economic attributes, often distinguished by its geographic location below the Mason-Dixon line.

Bargain of 1877

Deal made by a Republican and Democratic special congressional commission to resolve the disputed presidential election of 1876; Republican Rutherford B. Hayes, who had lost the popular vote, was declared the winner in exchange for the withdrawal of federal troops from involvement in politics in the South, marking the end of Reconstruction.

Samuel Tilden

Samuel Tilden was an American politician who served as the 25th Governor of New York and was the Democratic candidate for the U.S. Presidency in the disputed election of 1876.

Postmaster General

The head of the postal service, responsible for overseeing the operation of the national postal system.