10. Which of the following will NOT decrease the present value of the CCA tax sh

Question

10. Which of the following will NOT decrease the present value of the CCA tax shields associated with a capital investment project?
____
A) A decrease in the corporate tax rate
B) An increase in the discount rate
C) A decrease in the CCA rate
D) All of the above
E) None of the above
Hint:
11. If a project is expected to reduce inventory by $150, increase accounts payable by $100 and increase accounts receivable by $10, what kind of effect does working capital have during the life of the project?
____
A) Reduce investment outlay by $240
B) Reduce investment outlay by $60
C) Raise investment outlay by $40
D) Working capital has no effect during the life of this project
Hint:

12. M&M is considering the purchase of a new machine for $50,000, installed. M&M will use the CCA method to depreciate the machine. This machine is included in CCA class 8 (20%). MM expects to sell the machine at the end of its 4-year operating life for $10,000. If M&M

Explanation / Answer

10. Which of the following will NOT decrease the present value of the CCA tax shields associated with a capital investment project?
____
A) A decrease in the corporate tax rate
B) An increase in the discount rate
C) A decrease in the CCA rate
D) All of the above
E) None of the above
Hint:

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