DogChew Products Needs to Replace Its Rawhide Tanning and Molding

question 7

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) .
What is the present value of the depreciation tax shield?

• A) $26,876
• B) $277,177
• C) $186,000
• D) $84,074
• E) $120,888

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Definitions:

Control Share Acquisition

The act of purchasing a significant portion of a company's shares to gain influence or control over its management and policies.

Business Combination

The process of merging two or more companies into one entity, often to expand market share or integrate complementary assets.

Corporate Constituency

The various groups and individuals that a corporation interacts with and has obligations toward, including shareholders, employees, customers, and the community.

Stakeholder Laws

Regulations aimed at protecting the interests of all parties affected by a company's operations, not just its shareholders.