Calculation of the net advantage to leasing

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An asset has an installed cost of $1 million, a life of 10 years, a CCA rate of 30%, and a salvage value of $30,000. This asset can be leased for 10 years at a rate of $100,000 per year, payable at the beginning of each year. The lessee's marginal tax rate is 40% and borrowing cost is 12%. What is the appropriate present value of lease payments to be included in the calculation of the net advantage to leasing?

Reference no: EM132774783

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