In July 2016,Cassie Purchases Equipment for $55,000 to Be Used

question 21

Multiple Choice

In July 2016,Cassie purchases equipment for $55,000 to be used in her business.Assuming Cassie has a small net loss from her business prior to the deduction,what is the maximum amount of cost recovery Cassie can deduct?

• A)$7,860.
• B)$55,000.
• C)$27,500.
• D)$31,430.

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Definitions:

NPV

Net Present Value, a financial metric used to evaluate the profitability of an investment or project, calculated by discounting the expected future cash flows to present day values and subtracting the initial investment cost.

Discounted Payback Period

The time required to recoup the cost of an investment while accounting for the time value of money, typically used in capital budgeting to assess profitability.

After-Tax Cash Inflows

The net cash that a business generates after accounting for all taxes.

Required Return

The minimum return an investor expects to achieve on an investment, considering its risk level.