DogChew Products Needs to Replace Its Rawhide Tanning and Molding

question 39

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

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Definitions:

Head Injury

A trauma to the head that can lead to various degrees of brain damage, ranging from mild concussions to severe brain injury.

Unconscious

A state where a person is not awake and not aware of their surroundings or able to react to stimuli.

Tremor

An involuntary, rhythmic muscle contraction leading to shaking movements in one or more parts of the body, often affecting the hands, arms, eyes, face, head, vocal cords, trunk, and legs.

Alcohol

A chemical compound commonly found in beverages such as beer, wine, and spirits, characterized by its intoxicating effect when consumed.