Stoneworks Equipment needs $130,000 of new equipment for a project. The equipment will be worthless after 4 years. The equipment belongs in a 35 percent CCA class. The equipment can be leased for $34,500 a year. The firm can borrow money at 8.5 percent and has a 35 percent tax rate. What is the net advantage to leasing?

Answer rating: 100% (QA)

Solution X SxTxC 1r2 1r 1 1r rC P 1 Present Value of CCA PxTxC Tax ... View the full answer