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

question 91

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 overall present value of the CCA tax shields from this asset,given a tax rate of 40%,and a cost of capital of 12%?

• A)$912,310
• B)$1,076,346
• C)$1,617,972
• D)$2,432,211
• E)$3,244,898

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Definitions:

Rate of Desertion

The frequency or proportion at which individuals abandon their posts or duties, especially in a military context.

War Effort

Collective activities, resources, and work dedicated by a country or group towards achieving victory in a military conflict.

Jefferson Davis

The President of the Confederate States of America during the American Civil War, known for his leadership and advocacy for Southern secession.

Common People

A term referring to the average individuals or everyday citizens, often excluding the elite or those in power.