Question

Your company is considering the purchase of a fleet of cars for $200,000. It can borrow...

Your company is considering the purchase of a fleet of cars for $200,000. It can borrow at 11%. The cars will be used for four years. At the end of four years they will be worthless. You call a leasing agent and find that the cars can be leased for $55,000 per year. The corporate tax rate is 40% and the cars belong in CCA class 10 (a 30% class), what is the net advantage to leasing?

Select one:

a. $7,771

b. $16,217

c. $12,313

d. $5,399

e. $10,075

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