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 8%. 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. $277,177

b. $186,000

c. $236,959

d. $26,876

e. $243,885

2.

Suppose a project costs $375 and produces cash flows of $100 over each of the following seven years. What is the IRR of the project?

Select one:

a. There is not enough information; a discount rate is required

b. 18.6%

c. 10.0%

d. 13.0%

e. 15.3%