DogChew Products Needs to Replace Its Rawhide Tanning and Molding

question 121

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) .
Using straight-line depreciation to a salvage value of zero, what is the net advantage to leasing?

• A) -$79,102
• B) -$53,266
• C) $136,269
• D) $138,706
• E) $152,062

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Definitions:

Abbreviation

A shortened form of a word or phrase, typically used to save space or for convenience.

Unequal Tolerances

Tolerances that are not symmetrical, indicating different allowance limits for deviation above and below the nominal dimension.

Upper

In technical and engineering drawings, refers to the part or section above a specified reference point or line.

Lower

To decrease in position, value, or condition.