289,000. The asset will be placed in a 20% CCA asset class and qualify for the Accelerated Investment Incentive. The business has a 35% marginal income tax rate. What is the CCA tax shield (e.g. reduction in taxes) for the third year as a result of owning this asset? a. $11,00

289,000. The asset will be placed in a 20% CCA asset class and qualify for the Accelerated Investment Incentive. The business has a 35% marginal income tax rate. What is the CCA tax shield (e.g. reduction in taxes) for the third year as a result of owning this asset? a. $11,00

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter2: Financial Statements, Cash Flow,and Taxes

Section: Chapter Questions

Problem 18P: Rhodes Corporations financial statements are shown after part f. Suppose the federal-plus-state tax...

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

A business purchases a capital asset for $289,000. The asset will be placed in a 20% CCA asset class and qualify for the Accelerated Investment Incentive. The business has a 35% marginal income tax rate. What is the CCA tax shield (e.g. reduction in taxes) for the third year as a result of owning this asset? a. $11,006 b. $11,455 c. $11,329 d. $11,218 e. $10,924

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