Calculate the purchase price of the machine

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Reference no: EM13265567

Curie Company needs a new machine, which it can depreciate completely on a straight-line basis over a period of 4 years. Alternately, it can lease the machine for four years, paying $12,500 in lease payments in advance each year and claiming the tax benefit at the end of the year. The tax rate of Paisley is 32% and it can borrow money at 10% interest rate. Calculate the purchase price of the machine, which will equalize the cost of leasing to the cost of buying.

Reference no: EM13265567

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