The firm is considering either leasing or buying new $19,000 equipment. The lessor will charge $12,000 a year for a two-year lease. The equipment has a two-year life after which time it is expected to have a zero resale value. The firm uses straight-line depreciation, borrows money at 7% pre-tax, and has a tax rate of 21%. What is the net advantage to leasing? 

A) $1254 

B) $720 

C) −$167 

D) −$319 

E) −$720

Answer rating: 100% (QA)

Option B 720 is correct because the net present value is positive number ... View the full answer