For the property with the capital cost of $71,220, and using the applicable income tax rate of 29%, calculate the Disposal Tax Effect in the following three cases, with the salvage values at the end of the five years of the project being: 1.95% 2.100% 3.115% of the original cost base (i.e., capital cost). The CCA rate is 20%. Apply the "50% rule" (i.e., "half-a-year rule"). If necessary, use the capital gains tax rate of 14.5%.

For the property with the capital cost of $71,220, and using the applicable income tax rate of 29%, calculate the Disposal Tax Effect in the following three cases, with the salvage values at the end of the five years of the project being: 1.95% 2.100% 3.115% of the original cost base (i.e., capital cost). The CCA rate is 20%. Apply the "50% rule" (i.e., "half-a-year rule"). If necessary, use the capital gains tax rate of 14.5%.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 16EA: Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in...

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