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

---

Definitions:

Insurable Interest

A real and substantial interest in specific property or in someone’s life.

Insured-against Event

A specific occurrence or risk covered under an insurance policy, for which the insurer agrees to compensate the insured party if it happens.

Professional Malpractice

Negligence or incompetence on the part of a professional, such as a doctor or lawyer, that results in harm to a client or patient.

Liability Insurance

Insurance coverage that protects against claims arising from injuries or damage to other people or property.