What would be the net amount of the buy cash flow

Reference no: EM133611590

Question: Bondi Pizza Shop (BPS) is evaluating if it should lease or buy. The lease has four annual payments of $20,000 paid in advance for its new pizza oven that costs $65,000 and is expected to last four years. The salvage value of the oven at the end of year 4 is $7,000. The tax department will allow the oven to be depreciated over 6 years. The lease has a residual value of $11,000. The corporate tax rate is 30%. In a lease verse buy evaluation, what would be the net amount of the buy cash flow at the end of the 4th year?

Reference no: EM133611590

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