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

question 30

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 was the present value of the tax savings from the CCA tax shield in year 3 to the nearest dollar?

• A) $1,132.
• B) $1,698.
• C) $2,127.
• D) $2,831.

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Definitions:

Compassion

A feeling of deep sympathy and sorrow for another who is stricken by misfortune, accompanied by a strong desire to alleviate the suffering.

Jealousy

A complex emotion that encompasses feelings ranging from fear of abandonment to rage and humiliation, often triggered by the threat of losing something or someone of personal value.

Cognitive Interpretation

The process by which individuals perceive, comprehend, and make sense of information and stimuli in their environment.

Physiological Arousal

A state of heightened physiological activity, including increased heart rate, blood pressure, and energy mobilization, often in response to stimuli.