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What is the net advantage to leasing

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Pluto, Inc. is trying to decide whether to lease or buy some new equipment. The equipment costs $38,000, has a 3-year life and is worthless after the 3 years. The after-tax discount rate is 5 percent. The annual depreciation tax shield is $4,307 and the after-tax annual lease payment is $9,240. What is the net advantage to leasing.

Reference no: EM131710670

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