Calculate the net advantage to leasing

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Reference no: EM13746875

A firm is considering leasing a computer system that costs $1,000,000 new. The lease requires annual payments of $135,000 in arrears for 10 years. The lessee pays income taxes at a 35% marginal rate. If it purchased the computer system, it could depreciate it to its expected residual value over 10 years. The lessee's cost of similarly secured debt is 10% and its WACC is 15%.

Calculate the net advantage to leasing assuming zero residual value. Should the firm lease the computer system?

Calculate the net advantage to leasing assuming $250,000 residual value. Should the firm lease the computer system?

Reference no: EM13746875

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Calculate the net advantage to leasing : A firm is considering leasing a computer system that costs $1,000,000 new. The lease requires annual payments of $135,000 in arrears for 10 years. Calculate the net advantage to leasing assuming zero residual value. Should the firm lease the comput..

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