What is the total net cost of leasing the equipment

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Reference no: EM133560907

Question: Acme Packing Company is evaluating whether its new equipment should be purchased for $4200 or leased for $1240 for 6 years with lease payments made at the beginning of each year. The firm pays 7% on its debt and faces a tax rate of 24%. The tax benefits from making the lease payments are assumed to occur at the end of each year. What is the total net cost of leasing the equipment (in present value terms)? Although the net cost will represent a cash outflow, present your answer as a positive number.

Reference no: EM133560907

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