A Machine Is Purchased for $500,000 and Is Used Through

question 49

Multiple Choice

A machine is purchased for $500,000 and is used through the end of Year 2.The machine falls under asset class 43 with a capital cost allowance (CCA) rate of 30%.At the end of Year 2,the machine is sold for $75,000.What is the present value of the lost CCA tax shields if the firm's marginal tax rate is 40% and its cost of capital is 5%?

• A)$37,050
• B)$15,180
• C)$37,950
• D)$23,324
• E)$25,714

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Definitions:

Postwar West

Describes the political, social, and economic conditions and changes in Western countries after a major war, often referencing the period following World War II.

Populated State

A state or region that has a high density of human population.

Urban Areas

Regions characterized by high population density, advanced infrastructure, and significant economic activities, typically including cities and towns.

Mass Consumption

The widespread purchase and use of goods and services by a large number of people, characteristic of developed economies with high levels of consumer spending.