Use the Table for the Question(s)below

question 51

Multiple Choice

Use the table for the question(s) below.
Danby Construction is considering leasing a new crane for the next 5 years.Danby has created the following table of cash flows to help with the decision:

-Danby Construction has decided to lease a new crane for the next 5 years.The purchase price of the crane is $545,000,and the working life of the crane is 10 years.The crane falls under asset class 43 and has a capital cost allowance (CCA) rate of 30%.Assume disposal for $0 at the beginning of year 6.If leased,the annual lease payments will be $80,000 per year for five years,and it is a true tax lease.Assume the tax savings occur at the end of each year.If Danby's borrowing cost is 9%,and its tax rate is 30%,what is the amount of the lease-equivalent loan for the crane?

• A)$308,968
• B)$175,382
• C)-$363,441
• D)$156,032
• E)$289,618

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Definitions:

Immigrants

People who move from one country to another with the intention of settling or residing in the new country, often in search of better living conditions or opportunities.

Tradition

The transmission of customs, beliefs, and cultural practices from one generation to another.

Marian Anderson

A celebrated African-American contralto and one of the most important singers of the 20th century, particularly known for her performance at the Lincoln Memorial in 1939.