Why Do We Add the Present Value of the CCA

question 40

Multiple Choice

Why do we add the present value of the CCA tax shield to the NPV?

• A) Tax shield is a cost.
• B) The CAA tax shield arises from depreciating the asset.
• C) The CCA tax shield arises from expensing the interest.
• D) None of the above

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Definitions:

Physical Inventory

The process of counting the actual items of inventory in stock to verify records and accounts.

Single-Step Income Statement

A form of income statement in which the total of all expenses is deducted from the total of all revenues.

Gross Profit

The difference between sales revenue and the cost of goods sold before deducting overhead, payroll, taxes, and interest.

Income from Operations

The earnings generated from a business's core activities, excluding revenues and expenses from non-operational activities.