An asset costing 20,000 is expected to last three years when it can be sold for 16,000. The tax rate is 28%, capital allowances of 20% p.a. on a reducing balance basis are available and the cost of capital is 10%. What is the tax saving in respect of the capital allowances in year 2?

Question 10Select one:

a. 3,000

b. 2,526

c. 896

d. 717