User Account

All Pages

Calculate the present value of cca tax shield

Assignment Help Accounting Basics
Reference no: EM133091697

Question 1 - We are considering the purchase of a $560,000 computed based inventory management system. It is in class 10 with a CCA rate of 30 per cent. The computer has a four-year life. It will be worth $30,000 at that time. The system would save us $60,000 pre-tax in inventory-related cost. The relevant tax rate is 38%. Because the new setup is more efficient than our existing one, we would be able to carry less total inventory and thus free $45,000 in net working capital.

Required -

1. Calculate the present value of CCA tax shield.

2. Explain why the CCA tax shield is consider a source of cash-inflow.

Question 2 - Financial management decisions are made such that financial goals are to be achieved. A Company that fails to make these decisions may end up becoming part of history. This is the same sentiments shared by the likes of Nokia.

Required - To develop an explicit financial plan, management must make key financial decisions. Identify and discuss Three basic Financial management decision areas required for every Organization aspiring to stay in business.

Question 3 - Suppose your firm is considering buying a van costing $85,000. What is the Undepreciated capital cost (UCC) for the van after Six years. Note: the van falls in class 10 with a 30 percent CCA rate. Use the tabular approach when calculating the UCC after Six years.

a) Calculate the UCC at the end of year 6

b) If the Van is sold at $4500 at the end of 6 years, what is the tax implication? what name is assigned to this tax implication?

c) If the Van is sold at $55,000 at the end of 6 years, what is the tax implication? what name is assigned to this tax implication?

Question 4 - John recently retired at the age of 68 years. John's net worth is $500,000 and the fund is available for investment. John wants moderate (low) capital growth, extensive capital preservation and income generation to keep up with day-to-day expenses. John wants moderate risk and since he is retired is now on a lower tax bracket.

Required - Propose and discuss extensively an asset allocation policy for John. Consider the following asset classes; money market highly liquid investment, cyclical stocks, defensive stocks, conservative mutual funds

Reference no: EM133091697

Questions Cloud

Identify possible solutions to an identified problem : Facilitate a brainstorming session to identify possible solutions to an identified problem
What was the gain or loss recognized : The entity recognized interest expense of 12,000 in the 2021 income statement. What was the gain or loss recognized in the income statement
Should lll buy or lease the new equipment : LLL's marginal tax rate is 20%. This new equipment requires special insurance of $5,000 per year paid. Should LLL buy or lease the new equipment
Determine the volume at which firm : You are the general manager of a firm with fixed costs of $550,000 per quarter. Your variable costs are $80 per unit and your selling price is $125 per unit.
Calculate the present value of cca tax shield : We are considering the purchase of a $560,000 computed based inventory management system. Calculate the present value of CCA tax shield
Roadmap for guiding and shaping change : Innovation is about change - but merely changing things randomly and in different directions is not likely to move the organization forward.
Good strategic recommendation for hm : Is establishing an experience center a good strategic recommendation for H&M.? The experience center would allow customer to come try out products and place ord
Develop a website for a new client : You are the leader of a group that is trying to develop a website for a new client. One of your group members, who was assigned the task of researching and anal
Difference between protecting the natural world : What is the difference between protecting the natural world because we humans are valuable and because animals are valuable?

Reviews

Write a Review

Accounting Basics Questions & Answers

  Aspects of the tax law

Discuss the probable justification for each of the following aspects of the tax law

  What costs will occur and vice versa

How to analyze using info graphic to make decision that must be taken by the company along with the impacts, advantage, and disadvantage?

  Find out the cost of capital of debentures

The debentures are issued at a discount of 5% and the floatation cost is estimated to be 1%. Find out the cost of capital of debentures

  Prepare any journal entries you consider necessary

Prepare any journal entries you consider necessary, including year-end entries (December 31), assuming these are available-for-sale securities

  What is the interest rate on this offer

A retail store is offering a diamond ring for sale for 36 months at $128 per month. The retail price of the ring is $4,000. What is the interest rate

  Fixed costs charged to the division total

Brandi company is deciding wether or not to discontinue one of its divisions. The division's contribution margin is $27,000 per year. The fixed costs charged to the division total $32,000, but $15,000 would be eliminated if the divsion is disconti..

  Alex rodriguez inc a publishing company is preparing its

alex rodriguez inc. a publishing company is preparing its december 31 2010 financial statements and must determine the

  How much did Garth invest during the year

At the beginning of the year, Carrie's capital account was $200,000. By the end of the current year the capital account had decreased to $150,000.

  What is total stockholders'' equity at the end of the year

issued more common stock for $29,500. What is total stockholders' equity at the end of the year

  Make an income statement using variable costing

On January 1 of the current year, Townsend Co. commenced operations. Prepare an income statement using variable costing

  Determination of taxable income

Brown Corporation, an accrual basis corporation, has taxable income of $150,000 in the current year. Included in its determination of taxable income are the following transactions.

  Board of directors detailing

Read Case Study I-2 entitled "VoIP2.biz, Inc.: Deciding on the Next Steps for a VoIP Supplier" on pages 128-143 in your textbook, Managing Information Technology. Write a debriefing report to include options for future activities to be presented t..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd