Alter bridge is weighing a lease versus a purchase of some new machinery. The purchase price...

 

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Alter bridge is weighing a lease versus a purchase of some new machinery. The purchase price is $231,800. The equipment has a 4-year life after which time it is expected to have a resale value of $68,000. The equipment belongs in a 30 percent CCA class and the firm can borrow money at 9,5 percent. The equipment can be leased for $62,900 a year for 4 years. The company does not expect to owe any taxes for the next 4 years because of accumulated net operating losses. Compute the monetary benefit of the lease. Could you propose any alternative leasing structure in place of the existing specifications? Alter bridge is weighing a lease versus a purchase of some new machinery. The purchase price is $231,800. The equipment has a 4-year life after which time it is expected to have a resale value of $68,000. The equipment belongs in a 30 percent CCA class and the firm can borrow money at 9,5 percent. The equipment can be leased for $62,900 a year for 4 years. The company does not expect to owe any taxes for the next 4 years because of accumulated net operating losses. Compute the monetary benefit of the lease. Could you propose any alternative leasing structure in place of the existing specifications?

Answer rating: 100% (QA)

A D E G Years 1 2 3 4 Annual lease payments Saving of cost of machi... View the full answer