Pharma Support Limited Is Considering the Lease of New Computers

Multiple Choice

Pharma Support Limited is considering the lease of new computers from IT Leasing Limited. The computers cost $65 377 and have an estimated economic life of 3 years. The CCA rate is 45% and Pharma Support has a borrowing rate of 12% and a cost of capital of 10%. IT Leasing's borrowing rate is 8% and its cost of capital is 6%. Both companies have a tax rate of 30%. What is the value of the tax shield for IT Leasing?

A) $15 318
B) $16 816
C) $13 984
D) $12 077