Arndt Corporation is deciding between purchasing required equipment or leasing it. If purchased, it has calculated its total expected after-tax cash outflows each year (in $ thousands) as follows: Year 1 $43; Year 2 $36; Year 3 $33; Year 4 $29; and Year 5 $20 with annual cash flows assumed to occur evenly throughout the year (use the mid-year adjustment). If leased, the annual after-tax lease payment of $36 thousand would be due at the beginning of each of the next five years. The company's after-tax cost of debt is 5%. What is the net advantage to leasing (NAL)? If leasing is more expensive, be certain to place a negative sign before your answer. Present your answer in thousands, rounded to one decimal place (e.g., 5.4 or -4.3).

Answer rating: 100% (QA)

To calculate the net advantage to leasing NAL we need to compare the aftertax cash outflows of purch... View the full answer