Martin's Methods, an educational training firm, has taken steps to reduce the time taken to process the cheques received from its customers from four days to two. Additionally, the firm has switched banks, as its prior bank made funds available for withdrawal one day after deposit, while the new bank makes deposits available immediately. All else the same, these steps should __________ the firm's __________ float.

Select one:

a. Increase; collection.

b. Decrease; disbursement.

c. Decrease; net.

d. Increase; net.

Question 12

Maxine's is considering either purchasing or leasing a $600,000 piece of specialized equipment. The equipment has a life of 5 years, belongs in a 30% CCA class, and will have no residual value. The cost of debt is 12% for this purchase. A lease on the equipment for 5 years is priced at $150,000 a year. Maxine's corporate tax rate is 34%. The lessor has a tax rate of 35%.

What is Maxine's break-even lease payment amount?

Select one:

a. $170,802

b. $133,677

c. $182,968

d. $155,980

e. $109,057

Question 13

One legitimate advantage to leasing is that:

Select one:

a. Leasing provides a source of off-balance sheet financing.

b. By leasing, the lessee's income statement will be stronger.

c. Taxes may be reduced by leasing.

d. Leasing provides 100% financing

e. Unlike borrowing and purchase, leasing decreases a firm's financial leverage.