BiliBala Inc. needs some new equipment. Now the company can choose to either lease or purchase the equipment. The purchase price is $80,000. The equipment has a 5-year life after which time it will be sold at $10,000. The company could borrow money at 6%, and faces a 35% tax rate. The equipment can be depreciated at a CCA rate of 30%. For leasing, the manufactory will charge a pre-tax lease fee of $15,000 per year. What is the net advantage to leasing? O $4,760

BiliBala Inc. needs some new equipment. Now the company can choose to either lease or purchase the equipment. The purchase price is $80,000. The equipment has a 5-year life after which time it will be sold at $10,000. The company could borrow money at 6%, and faces a 35% tax rate. The equipment can be depreciated at a CCA rate of 30%. For leasing, the manufactory will charge a pre-tax lease fee of $15,000 per year. What is the net advantage to leasing? O $4,760

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 9P

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