Use the Information Below to Answer the Following Question(s)

question 143

Multiple Choice

Use the information below to answer the following question(s) .Albernie Ltd.purchased a CCA Class 8 (CCA rate of 20%) item of equipment for $90,000.The equipment was the only item in the Class 8 capital cost allowance pool.The equipment is expected to generate savings in the amount of $40,000 per year.The company uses straight-line depreciation, estimates a 3 year useful life with $20,000 salvage value for the new equipment.The tax rate is 35%, and Albernie has a required rate of return of 9.0%.
-What is present value of the after-tax savings that Albernie Ltd.expects during the useful life of the equipment?

• A)$65,814
• B)$101,252
• C)$81,257
• D)$50,370
• E)$42,188

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Definitions:

Self-Fulfilling Prophecy

A belief or expectation that influences individuals to act in ways that make the belief become true.

Robert Merton

A prominent sociologist who developed theories on social structure, anomie, and the concept of self-fulfilling prophecy.

Pseudo-Patients

Individuals who simulate illness to experience and study the conditions in psychiatric hospitals, a concept introduced by psychologist David Rosenhan.

David Rosenhan

An American psychologist known for his experiment "On Being Sane in Insane Places," which challenged the validity of psychiatric diagnoses.