Island Tool and Dye Limited Is a Prince Edward Island

Multiple Choice

Island Tool and Dye Limited is a Prince Edward Island based manufacturing company considering acquiring new machinery worth $25 956. Island Tool and Dye may purchase the equipment from their supplier or lease it from Town and Country Leasing. The machinery's estimated salvage value after 8 years is estimated at $2 600. Island Tool and Dye's tax rate is 35%, before-tax borrowing rate10%, and the CCA rate is 20%. Keeping in mind that Island Tool and Dye is eligible for the federalInvestment Tax Credit (ITC) , what is the present value of the company's cost of purchasing theequipment? Round your final answer to the nearest dollar.

A) $15 843
B) $18 115
C) $16 510
D) $17 290