Should JJC lease

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Question - This is a challenge problem. Jack and Jill Company (JJC) has a tax rate of 30 per cent. It is looking at obtaining a new laser scanner that identifies potential melanomas. The cost is $50,000 but JJC can lease it for $3,521 a month, with payments made in advance for the next tax year. Alternatively, it can borrow at 8.24 per cent per year with payments of $4,042 a month in arrears. The lease has a residual of $10,000 when the salvage value will be $12,000. Because of the special nature of the equipment the Commissioner of Taxation will allow monthly depreciation of $3 000. Should JJC lease?

Reference no: EM132733486

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