Question: Consider the data in Problem 18-1. Assume that Reynoldss tax rate is 40% and that the equipments depreciation would be $100 per year. If the

Consider the data in Problem 18-1. Assume that Reynolds’s tax rate is 40% and that the equipment’s depreciation would be $100 per year. If the company leased the asset on a 2-hear lease, the payment would be $110 at the beginning of each year. If Reynolds borrowed and bought, the bank would charge 10% interest on the loan. In either case, the equipment is worth nothing after 2 years and will be discarded. Should Reynolds lease of buy the equipment?

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