Should turnberry buy or lease these vans

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Reference no: EM13941138

Turnberry Trucking Service would like to acquire 400 vans for its business. It can buy each van for $35,000, depreciate it completely over 7 years, and then sell it for $10,000. The tax rate of Turnberry is 35%, and its cost of debt is 12%. Prince’s Rental Company will lease these vans to Turnberry for a period of 7 years at the annual rate of $5200, paid in advance. Turnberry will get the tax benefits of the lease at the end of each year. Should Turnberry buy or lease these vans?

Reference no: EM13941138

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