the question is obvious and clear it is related to taxation in canada

132 Chapter 3 Assignment Probiems is in the process of ne As he is looking to pu Assignment Probiem Three-6 g considered is an intere rest free to putes red Ethridge is a valued employee of a large Canadian co tiating a new compensation package for the coming yea has an excellent c residence, one of the alternatives that is bein used to purchase this property Fred needs $350,000 to comfortably finance this purchase. As he b The company has indicated that they will extend a $350,000, 5 However, they will only do so if the cost of providing the loan has providing additional salary The Company is subject to tax at a combined federal/provincial rate funds are available, the Company has alternative investment opporturn rate of 10 percent. Because of Fred's current high salary, any additio taxed at a combined federal/provincial rate of 49 percent. at rating, the Royal Bank is prepared to extend the $350,000 on a 5 ve year, interest fr rate of 4.75 percent. after tax cost as of 29 percent. When rtunities that earn a pre-tax on w Assume that the prescribed rate for the current year is 2 percent. Required: A. Determine the tax consequences to Fred and the cost to the Company in after-tax earnings, of providing Fred with a $350,000 interest free loan for the the loan. Ost first year of B. Determine the amount of additional salary that could be provided to Fred for the sa after tax cost to the Company that you calculated in Part A. C. Which alternative would you recommend that Fred accept? Explain your conclusion. me Assignment n