A Company with a Tax Rate of 38% Is Planning

question 46

Multiple Choice

A company with a tax rate of 38% is planning to acquire a $1 125 000 asset that has a 30% CCA rate. The company may purchase the asset or lease it. The cost of borrowing is 12%. The prospectivelessor has a 46% tax rate and a 5.5% cost of capital. Which of the following statements is correct about the present value of the tax shield on the CCA to the lessor compared to the present value of the tax shield to the lessee?

• A) The value to the lessor is 143% of the value to the lessee
• B) The value to the lessee is 139% of the value to the lessor
• C) The value to the lessee is 113% of the value to the lessor
• D) The value to the lessor is 129% of the value to the lessor

Develop critical thinking skills to evaluate ethical dilemmas in business.

Appreciate the significance of social responsibility and ethical standards in business sustainability.

Understand the broad implications of social media for personal and corporate blogs.

Comprehend the meaning and scope of social media.

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Definitions:

Appearance

The way in which something looks or seems to the eyes or mind, encompassing aspects like visual impression and aesthetic appeal.

Businesslike Attire

Clothing that is deemed appropriate for formal or professional settings, emphasizing a neat and conservatively stylish appearance.

Communication Style

The manners and methods used by individuals to convey their needs, ideas, or feelings to others, including verbal, non-verbal, written, and digital forms.

Population Percent

The percentage representation of a specific group within the total population.