Regard to a needed piece of business equipment

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Taxpayer, who has a marginal tax rate of 25%, has two options with regard to a needed piece of business equipment. She can buy the equipment now for $10,000 cash, use it for six years, and discard it (no salvage value). The asset would be expensed immediately, not depreciated. Or, she can lease it on an operating for six years at a rent of $2,000 per year. The applicable discount rate is 7%. Which option should she choose and why?

Reference no: EM13748849

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Regard to a needed piece of business equipment : Taxpayer, who has a marginal tax rate of 25%, has two options with regard to a needed piece of business equipment. She can buy the equipment now for $10,000 cash, use it for six years, and discard it (no salvage value). The asset would be expensed im..

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