Firms favour assets with high CCA rates because:
A)They have longer economic lives
B)It reduces the total amount of taxes paid over the project's life
C)They increase net accounting profits over the project's life
D)Their choice impacts project net present value favourably

Question

Quizplus · Accepted Answer

High Capital Cost Allowance (CCA) rates allow firms to depreciate assets faster, reducing taxable income in the early years and improving cash flow, which can positively impact the project's net present value (NPV).

Firms Favour Assets with High CCA Rates Because