You Are the Manager of a Sales Division

question 27

Multiple Choice

You are the manager of a sales division.You are considering leasing a fleet of cars for your staff.You can buy the cars for $300,000 or you can lease them for eight years at $60,000 per year.The company faces a tax rate of 40% and a CCA rate of 10% on vehicles.If the company buys the cars and finances the purchase with a loan, they will pay 7% in interest.Assume that after the term of the lease is over, the salvage value of the cars will be zero.What is the NPV of the lease?

• A)$9,340
• B)$16,754
• C)$29,521
• D)34,195

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Definitions:

Grandparents

The parents of one's parents, serving as a source of wisdom, tradition, and family heritage.

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Individuals who are hired and paid to work on a very short-term basis, often for a single day at a time.

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A financial status where certain goods, services, or transactions are not subject to taxation.

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Positive effects on physical or mental health resulting from specific behaviors, treatments, or lifestyle choices.