FIN 300 Chapter Notes -Capital Budgeting, Cash Flow, Capital Cost
Document Summary
Incremental earnings: amount by which a firm"s earnings are expected to change because of an investment decision: tells us how the decision will affect the firm"s reported profits from an account perspective. We are evaluating how the project will change the cash flows of the firm. Capital cost allowance (cca): cra method of depreciation for income tax purposes: to calculate the annual cca deductions, spi must first determine the tax year in which the purchase takes place. Tax year: fiscal year relevant for tax and cca calculations for the cra. The first cca deduction affects the taxable income and taxes for date 1 (the end of the first year. Asset class: one of a series of categories defined by the cra to indicate types of depreciable property that will be given the same treatment for cca calculations. Cca rate, d: proportion of undepreciated capital cost that can be claimed as cca in a given tax year.
