Should reynolds lease or buy the equipment

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Reference no: EM131067207

Assume that Reynolds’s tax rate is 40% and that the equipment's depreciation would be $100 per year. If the company leased the assets on a 2 year lease, the payment would be $110 at the beginning of each year. If Reynolds borrowed and bought, the bank would charge 10% interest on the loan. in either case, the equipment is worth nothing after 2 year and will be discarded. Should Reynolds lease or buy the equipment?

Reference no: EM131067207

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