You Are Considering Adding a Microbrewery onto One of Your

question 30

Multiple Choice

You are considering adding a microbrewery onto one of your firm's existing restaurants.This will entail an investment of $40,000 in new equipment.The new equipment falls under asset class 43 and has a capital cost allowance (CCA) rate of 30%.If your firm's marginal corporate tax rate is 35%,then what is the value of the microbrewery's CCA tax shield in the first year of operation?

• A)$2100
• B)$14,000
• C)$5200
• D)$26,000
• E)$6000

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Definitions:

Break-even Sales

The amount of revenue needed to cover total fixed and variable costs, resulting in zero profit or loss.

Consumer Division

A part of a company focused on selling products or services directly to end-users or consumers.

Fixed Expenses

Expenses that remain constant regardless of the amount of goods produced or sold, including costs like lease payments, wages, and insurance fees.

Break-even Sales

The amount of revenue required to cover both the variable and fixed costs of production, resulting in no profit or loss.