Calculate the total annual lease payments for all computers

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Reference no: EM13941135

Carnoustie Corporation needs 145 desktop computers, which it can buy for $1700 each. Carnoustie will depreciate the computers uniformly over their useful life of 4 years. An investment tax credit of 6% is also available, and the computers will have no residual value. Carnoustie plans to borrow the money at an interest rate of 10% specifically to finance the purchase. The tax rate of Carnoustie is 35%. Prestwick Leasing Corporation can also lease the same computers to Carnoustie for the same period. Calculate the total annual lease payments for all computers, made in advance each year, and their tax benefit taken right away, that will make Carnoustie indifferent to leasing or buying.

Reference no: EM13941135

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