Your Company Is Considering the Purchase of a flEet of Cars

question 217

Multiple Choice

Your company is considering the purchase of a fleet of cars for $195,000. It can borrow at 8.5%. The cars can be leased for $55,000 per year and will be worthless at the end of four years. The
Corporate tax rate is 34% and the cars belong in CCA class 10 (a 30% class) . If you do not expect to
Pay taxes for the next four years, what is the net advantage to leasing?

• A) -$471
• B) $1,455
• C) $7,842
• D) $14,767
• E) $15,217

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