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Net advantage to leasing from company standpoint

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You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner ( leasing is a very common practice with expensive, high-tech equipment0. The scanner costs $3.1 million and it would be depreciated straight-line to zero over five years. Because of radiation contamination, it will actually be completely valueless in five years. You can lease it for $750,000 per year for five years.Assume your Company dose not contemplate paying taxes for the next several years. You can borrow at 8b percent before taxes. What is the net advantage to leasing from your Company's standpoint?

Reference no: EM133057161

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