1. what are the underpreciated capital cost
at the end of each year?
2. calculate the yearly tax savings over the 5 years that results from the CCA deduction from income?
Homework Answers
All amounts are in Million
1.
| Cost of air craft is $750M and assuming the value of aircraft at fourth year is NIL | ||
| Year | Depreciation for the year | Undepreciated capital cost |
| 1 | $ 187.50 | $ 562.50 |
| 2 | $ 187.50 | $ 375.00 |
| 3 | $ 187.50 | $ 187.50 |
| 4 | $ 187.50 | $ - |
2.
| Year | Depreciation for the year | Yearly Tax savings |
| 1 | $ 187.50 | $ 75.00 |
| 2 | $ 187.50 | $ 75.00 |
| 3 | $ 187.50 | $ 75.00 |
| 4 | $ 187.50 | $ 75.00 |
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