A Textile Company Invests $12 Million in an Open-End Spinning

question 70

Multiple Choice

A textile company invests $12 million in an open-end spinning machine.The machine belongs to asset class 43 and has a capital cost allowance (CCA) rate of 30%.If the company sold it immediately after the end of year 3 for $8 million,what would be the present value of the lost CCA tax shields from the sale of this asset,given a tax rate of 40%,and a cost of capital of 12%?

• A)$654,336
• B)$928,910
• C)$1,452,613
• D)$1,626,926
• E)$2,285,714

---

Definitions:

Direct Marketing

A type of advertising strategy that reaches out to potential customers directly, using emails, mail, and phone calls, bypassing traditional retail channels.

Customer Relationships

The strategies and techniques businesses use to maintain and enhance interactions and engagement with their customers over time.

Market Share

The percentage of total sales in a market captured by a particular brand, product, or company.

Adapted Quickly

The ability of an individual or organization to respond to changes or challenges in a swift and effective manner.