Assume zero taxes-should the company buy or lease

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Reference no: EM132009262

Assume zero taxes. Equipment can be leased at $10,000 per year (first payment one year hence) for ten years or purchased at a cost of $64177. The company has a weighted average cost of capital of 15 percent. A bank has indicated that it would be willing to make a loan of $64,177 at a cost of 10 percent. The equipment will be used for ten years, There is zero salvage value

1) Should the company buy or lease?

2) Assume 20% taxes- should the company buy or lease ?

Reference no: EM132009262

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