Manti Company Purchased a New Machine on January 2, Year

question 132

Multiple Choice

Manti Company purchased a new machine on January 2, Year 1. Cost and other data relating to the machine follow:
$\begin{array}{|l|r|}\hline \text { Cost of Machine } & \$ 140,000 \\\hline \text { Salvage Value } & \$ 20,000 \\\hline \text { Useful Life } & 12 \text { years } \\\hline\end{array}$
The machine is in Class 7 with a maximum $15 \%$ CCA rate. Manti uses an after-tax discount rate of $12 \%$ for capital budgeting decisions. The income tax rate is $40 \%$ .
- If Manti deducts the maximum CCA for tax purposes,what will be the approximate present value (as of January 2,Year 1) of the CCA tax shield for Year 2?(Do not round your intermediate calculations.)

• A) $6,194.
• B) $7,700.
• C) $9,291.
• D) $19,425.

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Definitions:

Conglomerate Merger

The merger of two organizations competing in different markets.

Different Markets

Refers to various types of markets or platforms where goods, services, or securities are exchanged, including but not limited to geographic, demographic, or product-based distinctions.

Cultural Assimilation

is the process by which individuals or groups from one culture absorb and integrate the cultural attributes of a dominant or surrounding society.

Cultural Integration

The process where individuals from different cultural backgrounds come to live together harmoniously, sharing and adopting values, traditions, and norms.