Review the problem related to the computers

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Question: You run a financial service firm where you replace your employee's computers every three years. You have 500 employees, and each computer costs $ 2,500 currently the old computers can be sold for $ 500 each. The new computers are generally depreciated straight line over their 3-year lives to a salvage value of $ 500. A computer-service firm offers to lease you the computers and replace them for you at no cost, if you will pay a leasing fee of $ 5 million a year (which is tax deductible). If your tax rate is 40%, would you accept the offer?

Reference no: EM131683217

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