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What is the net advantage to leasing

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ABC needs to replace its equipment. It can be used for five years and will have no salvage value. The equipment costs $930,000. The firm can lease it for $245,000 a year (payable at the beginning of the year), or it can borrow the money to purchase the equipment at 9%. The firm's tax rate is 39%. The CCA rate is 20% (Class 8). What is the net advantage to leasing if the company will not pay taxes for the next five years?

Reference no: EM132682079

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