Multiple Choice
Charlotte Computer Services is considering purchasing equipment at $100 000. It is anticipated the equipment will have a useful life of five years. It will be depreciated on a straight-line basis. Operating revenue is expected to be $74 000 per annum and operating expenses $25 000 per annum. The equipment is subject to an investment allowance of 10 per cent and the tax rate is 30 per cent. The after-tax hurdle rate is 12 per cent. What is the tax effect of the depreciation?
A) $3000
B) $21 630
C) $24 630
D) $6000
Correct Answer:
Verified
Correct Answer:
Verified
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