Q1- ABC 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 5%. The firm's tax rate is 40%. The CCA rate is 20% (Class 8).What is the present value of the depreciation tax shield?

Select one:

a. $336,959

b. $343,885

c. $318,767

d. 301,242

e. $351,193

Q2- A firm's stock has a required return of 10%. The stock's dividend yield is 5%. What is the dividend the firm is expected to pay over a one year period if the current stock price is $80?

Select one:

a. $2.80

b. $4.00

c. $2.40

d. $2.00

e. $3.20