Calculate the cost of purchasing the equipment

Reference no: EM13293956

Reynolds Corporation plans to purchase equipment at a cost of $2 million. The company's tax-rate is 35 percent and the equipment's depreciation would be $500,000 per year for 4 years. If the company leased the asset on a 4-year lease, the payment would be $600,000 at the beginning of each year. If Reynolds borrowed and bought, the bank would charge 12 percent interest on the loan. a. Calculate the cost of purchasing the equipment. b. Calculate the cost of leasing the equipment. c. Calculate the NAL.

Reference no: EM13293956

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