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).
Using straight-line depreciation to a salvage value of zero, what is the net advantage to leasing?
A) -$79,102
B) -$53,266
C) $136,269
D) $138,706
E) $152,062

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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).
Using straight-line depreciation to a salvage value of zero, what is the net advantage to leasing?
A) -$79,102
B) -$53,266
C) $136,269
D) $138,706
E) $152,062

DogChew Products Needs to Replace Its Rawhide Tanning and Molding