Use the Table for the Question(s)below

question 103

Multiple Choice

Use the table for the question(s) below.

-Visby Rides,a livery car company,is considering buying some new luxury cars.After extensive research,they come up with the above estimates of free cash flow from this project.The cars belong to asset class 10 and have a capital cost allowance (CCA) rate of 30%.The cars will be sold at the end of 3 years for $150,000.What is the present value of the lost CCA tax shields of the project,given that the cost of capital is 10%,and the company faces a marginal tax rate of 25%?

• A)$8342
• B)$21,131
• C)$10,112
• D)$25,912
• E)$28,125

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Definitions:

Scope

Refers to the extent or range of an area or subject matter that something deals with or to which it is relevant.

Business Message

Communication conveyed through various channels that is related to the conduct, operation, or management of a business.

Range of Information

The scope or extent of data, facts, and insights covered within a particular area of study or interest.

Sequence

A specific order in which related events, movements, or things follow each other.