Maxine's Is Considering Either Purchasing or Leasing a $600,000 Piece

question 8

Multiple Choice

Maxine's is considering either purchasing or leasing a $600,000 piece of specialized equipment. The equipment has a life of 5 years, belongs in a 30% CCA class, and will have no residual value. The cost of debt is 12% for this purchase. A lease on the equipment for 5 years is priced at $150,000 a year. Maxine's corporate tax rate is 34%. The lessor has a tax rate of 35%.

What is the net advantage to leasing for the lessor?

• A) -$18,568
• B) -$17,640
• C) -$17,488
• D) -$16,813
• E) $16,619

Understand the principles of cost recovery deductions and their application to different types of assets.

Calculate and apply the maximum expense deduction for various assets under specific tax provisions.

Analyze the implications of business versus personal use on tax deductions for expenses and assets.

Identify deductible business expenses and understand the criteria for their deductibility.

---

Definitions:

Assimilation

The process by which a person or a group's language and, or culture come to resemble those of another group.

Internal Colonialism

A concept explaining how a country's dominant group exploits minority groups for its economic advantage, maintaining social, economic, and political dominance.

Indigenous Peoples

Ethnic groups who are the original inhabitants of a given region, maintaining traditions or other aspects of early culture associated with those regions.

Ukrainians

A East Slavic ethnic group native to Ukraine, sharing a common culture and history.