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What is the net advantage to leasing

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Your firm is considering either leasing or buying some new equipment that belongs in a 20 percent CCA class. The lease payments will be $5,600 a year payable at the beginning of each year. The purchase price is $15,900. The equipment has a 3-year life after which time it is expected to have a resale value of $400. Your firm borrows money at 7.5 percent, and has a 35 percent tax rate.

Problem 1: What is the net advantage to leasing?

Reference no: EM132837910

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