Volo Ltd has recently purchased two machines at $50 000 each. Each machine has a useful life of 5 years, and will be fully depreciated at the end of their useful lives. The government provides an investment allowance of 15 per cent. The tax rate is 30 per cent. The net cash flow impact of the investment allowance is:

Question

Quizplus · Accepted Answer

The net cash flow impact of the investment allowance is calculated by taking the total cost of the machines ($100,000), multiplying it by the investment allowance rate (15%), and then multiplying the result by the tax rate (30%) to find the tax savings. This gives: $100,000 * 15% * 30% = $4,500.

Volo Ltd Has Recently Purchased Two Machines at $50 000