Turner plc is considering whether to buy a machine costing 1,000 through a three-year loan with interest
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Turner plc is considering whether to buy a machine costing £1,000 through a three-year loan with interest at 14 per cent per year. The machine would have zero scrap value at the end of its three-year life. Alternatively, the machine could be leased for £320 per year, payable in arrears. Corporate tax is payable at 30 per cent and capital allowances are available over the life of the machine on a 25 per cent reducing balance basis. Calculate whether Turner should lease or buy the machine.
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Related Book For
Corporate Finance Principles and Practice
ISBN: 978-1292103037
7th edition
Authors: Denzil Watson, Antony Head
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