(8 points) equipment. The following information pertain to your analysis. company is considering signing a lease...

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(8 points) equipment. The following information pertain to your analysis. company is considering signing a lease agreement with Peacock Leasing Company to lease an VI. VII. VIII. 1. III. IV. V. The lease will be signed for a three-year period. The cost of the equipment is $1,000,000. The equipment will be under the three-year MACRS class. The equipment can be sold to net Tk.95,000 after its three years of use. The maintenance cost on the equipment shall be paid by the lessor. However, if your company bought the equipment, it would have to pay maintenance cost at $15,000 per year, payable at the beginning of each year. The maintenance cost is not tax deductible. Lease payments are $320,000 per year, payable at the end of each year. Your company could borrow the required $1,000,000 for a three-year period to buy the equipment at an annual before-tax cost 15 percent. The lease qualifies for a guideline lease. Would you advise your company to lease or buy the equipment? Make your decision based on NPV analysis. (Turn Overleaf (8 points) equipment. The following information pertain to your analysis. company is considering signing a lease agreement with Peacock Leasing Company to lease an VI. VII. VIII. 1. III. IV. V. The lease will be signed for a three-year period. The cost of the equipment is $1,000,000. The equipment will be under the three-year MACRS class. The equipment can be sold to net Tk.95,000 after its three years of use. The maintenance cost on the equipment shall be paid by the lessor. However, if your company bought the equipment, it would have to pay maintenance cost at $15,000 per year, payable at the beginning of each year. The maintenance cost is not tax deductible. Lease payments are $320,000 per year, payable at the end of each year. Your company could borrow the required $1,000,000 for a three-year period to buy the equipment at an annual before-tax cost 15 percent. The lease qualifies for a guideline lease. Would you advise your company to lease or buy the equipment? Make your decision based on NPV analysis. (Turn Overleaf

Answer rating: 100% (QA)

Based on the NPV analysis it is advised that the company should lease t... View the full answer