Asked by
Nicki Nicki Nicki
on Nov 07, 2024
Verified
Calculate the OCF and CCA tax shield given the following information: Sales $900,000; Costs $575,000; Depreciation $200,000. Tax rate is 34%.
A) OCF = $282,500; CCA tax shield = $68,000
B) OCF = $287,500; CCA tax shield = $70,000
C) OCF = $292,500; CCA tax shield = $72,000
D) OCF = $297,500; CCA tax shield = $74,000
E) OCF = $302,500; CCA tax shield = $76,000
CCA Tax Shield
A reduction in taxable income in Canada, achieved by deducting the Capital Cost Allowance on assets.
Operating Cash Flow (OCF)
Cash generated from a firm's normal business operations.
- Acquire knowledge on the role and value of cash flows in the context of financial examination and decisions on capital budgeting.
- Acquire knowledge on the effect of depreciation and tax shields on the cash flows from operations and the aggregate valuation of projects.
Verified Answer
KR
Learning Objectives
- Acquire knowledge on the role and value of cash flows in the context of financial examination and decisions on capital budgeting.
- Acquire knowledge on the effect of depreciation and tax shields on the cash flows from operations and the aggregate valuation of projects.