Your Company Is Considering the Purchase of a flEet of Cars

question 242

Multiple Choice

Your company is considering the purchase of a fleet of cars for $195,000. It can borrow at 8.5%. The cars will be used for four years. At the end of four years they will be worthless. The corporate tax
Rate is 34%. The cars belong in CCA class 10 (a 30% class) . What is the break-even lease payment?

• A) $35,675
• B) $47,328
• C) $55,000
• D) $56,128
• E) $57,705

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Definitions:

Sole Proprietorship

A business owned and operated by a single individual, without any formal legal entity separation.

C Corporation

A legal structure for corporations in the U.S. where the owners are taxed separately from the entity, providing limited liability protection.

Partnership

A business structure where two or more individuals share ownership, profits, and responsibilities for managing the enterprise.

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