Question: Q-1: ABC Products needs to replace its rawhide tanning and molding equipment. It can be used for five years and will have no salvage value.

Q-1: 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 6%. The firm's tax rate is 34%. The CCA rate is 20% (Class 8).What is the present value of the depreciation tax shield?

Select one:

a. $236,959

b. $120,888

c. $277,177

d. $258,913

e. $186,000

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