DogChew Products Needs to Replace Its Rawhide Tanning and Molding

question 180

Multiple Choice

DogChew Products needs to replace its rawhide tanning and molding equipment. It can be used for five years and will have no salvage value. The equipment costs $930,000. The firm can lease it for $245,000 a year, or it can borrow the money to purchase the equipment at 9%. The firm's tax rate is 39%. The CCA rate is 20% (Class 8) .

Assume that the original information is true, except that the firm uses the straight-line method to depreciate the equipment to zero over its five-year life. What is the annual depreciation tax shield?

• A) $26,876
• B) $53,752
• C) $62,023
• D) $84,074
• E) $72,540

Understand the implications of easy entry and exit in monopolistically competitive markets for firms’ competitive strategies and market power.

Assess the impact of a firm's size relative to the market in monopolistic competition versus other market structures.

Identify the strategic behaviors firms in monopolistically competitive markets may exhibit.

Understand privacy concerns related to the use of technology.

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Definitions:

Absolute Dating

A method of determining the age of an object or material, often by measuring the decay of radioisotopes.

Radioisotopes

Isotopes of elements that are radioactive, undergoing decay and emitting radiation in the process.

Fossil

Any past evidence of an organism that has been preserved in the Earth’s crust.