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).
Assume that the original information is true, except that the ﬁrm uses the straight-line method to
Depreciate the equipment to zero over its ﬁve-year life. What is the annual depreciation tax shield?

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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).
Assume that the original information is true, except that the ﬁrm uses the straight-line method to
Depreciate the equipment to zero over its ﬁve-year life. What is the annual depreciation tax shield?

DogChew Products Needs to Replace Its Rawhide Tanning and Molding