Paolo, the CEO of Paola Bros Inc., wants to have a Ferrari as a company car. The
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Paolo, the CEO of Paola Bros Inc., wants to have a Ferrari as a company car. The Ferrari costs $1.5 million. For tax purposes, assume that the car will depreciate at a rate of $180,000 per year. In five years, the Ferrari could be sold for $800,000. The Ferrari could be leased on a five-year operating lease for $200,000 per year. The lease payment would be made at the beginning of the year. If the effective tax rate of Paolo Bros Inc. is 35 percent, and its before-tax cost of borrowing is 8 percent, should Paolo lease the Ferrari or buy it?
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I have completed my graduation and master's in history from Jadavpur University Kolkata,India in 2012 and I have completed my B.Ed from the same University in 2013. I have taught in a reputed school of Kolkata (subjects-History,Geography,Civics,Political Science) from 2014-2016.I worked as a guest lecturer of history in a college of Kolkata for 2 years teaching students of 1st ,2nd and 3rd year. I taught Ancient and Modern Indian history there.I have taught in another school in Mohali,Punjab teaching students from classes 9-12.Presently I am working as an online tutor with concept tutors,Bangalore,India(Carve Niche Pvt.Ltd.) for the last 1year and also have been appointed as an online history tutor by Course Hero(California,U.S) and Vidyalai.com(Chennai,India).
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Related Book For
Introduction To Corporate Finance
ISBN: 9781118300763
3rd Edition
Authors: Laurence Booth, Sean Cleary
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