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How long at a minimum must the useful life of the equipment

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A manufacturer offers a $50,000 computer hardware equipment with a useful life of 6 years under either a financial lease requiring annual lease payments of $13,000 or under an operating lease with annual lease payments of $16,000. The CCA rate is 25% on the declining balance, the tax rate is 40% and the interest rate on a 6-year term loan is 15%.

How long at a minimum must the useful life of the equipment be in order for the financial lease to be as attractive as the operating lease?

Reference no: EM132577900

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