What is the net advantage to leasing

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Precision Tool is trying to decide whether to lease or buy some new equipment for its tool and die operations. The equipment costs $53,000, has a 3-year life and will be worthless after the 3 years. The pre-tax cost of borrowed funds is 6 percent and the tax rate is 34 percent. The equipment can be leased for $19,500 a year. What is the net advantage to leasing?

Reference no: EM13924981

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What is the net advantage to leasing : Precision Tool is trying to decide whether to lease or buy some new equipment for its tool and die operations. The equipment costs $53,000, has a 3-year life and will be worthless after the 3 years. The pre-tax cost of borrowed funds is 6 percent and..

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