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).
What is the net advantage to leasing?
A) -$88,132
B) -$20,592
C) $1,269
D) $13,706
E) $15,062

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The Answer of 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).
What is the net advantage to leasing?
A) -$88,132
B) -$20,592
C) $1,269
D) $13,706
E) $15,062

DogChew Products Needs to Replace Its Rawhide Tanning and Molding