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Sunny Flowers is considering the purchase of a small business that costs $500,000. Sunny plans to sell stock valued at $250,000. The stock would pay dividends of $20,000 per year. Sunny would borrow the remaining $250,000 from a local bank at 12 percent interest.
The business is expected to generate annual cash inflows of $80,000. Duane plans to operate the business for 15 years and then turn it over to his son.
-The amount of the capital cost allowance for the second year for Mike Manufacturing would be
A) $3,000.
B) $6,000.
C) $5,100.
D) $3,500.

Question

Quizplus · Accepted Answer

The question is asking for the capital cost allowance for Mike Manufacturing, but the given information is about Sunny Flowers and their potential purchase of a small business. The question is unclear and does not provide enough information to accurately calculate the capital cost allowance for Mike Manufacturing. Therefore, the best choice is to skip the question.

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