If the appropriate tax rate is 35%, the after-tax effect of a single CCA deduction of $60,000 is
A)$39,000 net after-tax cash outflow.
B)$39,000 net after-tax cash inflow.
C)$21,000 net after-tax cash outflow.
D)$21,000 net after-tax cash inflow.
E)$81,000 net after-tax cash inflow.

Question

Quizplus · Accepted Answer

The after-tax effect of a single CCA deduction of $60,000 can be calculated as follows:

Tax savings = CCA deduction x tax rate
Tax savings = $60,000 x 35%
Tax savings = $21,000

Therefore, the net after-tax cash inflow would be $21,000.

If the Appropriate Tax Rate Is 35%, the After-Tax Effect