What is Doggle NPV of leasing the equipment

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Question - Doggle Inc. is considering a 12-year project that generates $6,000 per year. It can either purchase the equipment for $28,500 or lease it from Loggle for $3,250 per year (paid at the beginning of each year). The equipment, which has a CCA rate of 25%, will have a salvage value of $1,500 at the end of year 12. Doggle does not have any other asset in the asset class. Its cost of debt is 7.5% and tax rate is 20%.

Loggle is a large leasing company that always has positive UCC for all its asset classes. Its cost of debt is 6% and tax rate is 30%.

Required -

What is Doggle's NPV of leasing the equipment?

What is the minimum lease payment required by Loggle.

Reference no: EM133056919

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