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Your company needs to acquire a new heavy-duty truck, as shown in the picture below, to haul equipment and supplies to the new LNG terminal
Your company needs to acquire a new heavy-duty truck, as shown in the picture below, to haul equipment and supplies to the new LNG terminal being built at Kitimat, BC. The tractor and trailer costs $240,000. Your options are to borrow at an interest rate of 8% (pre-tax) or lease the unit. Neither option will affect revenue. If you lease, the lease payments are $40,000 per year, payable at the beginning of each year, for eight years. If you buy the truck and trailer, you will use a CCA rate of 30%, using the Accelerated Investment Incentive. Initially, assume that both firms have a tax rate of 40%. If the lessee has a zero percent tax rate, what is the maximum lease payment the lessee will be willing to make: O$36,793 0$39,669 O$40,000 0$38,670 O$37,884 If the lessor has a 40% tax rate, what is the minimum annual lease payment the lessor will accept? 0$36,793 O$37,884 O$38,670 0$39,669 O$40,000
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