Question: Maxine's is considering either purchasing or leasing a $600,000 piece of specialized equipment. The equipment has a life of 5 years, belongs in a 30%
Maxine's is considering either purchasing or leasing a $600,000 piece of specialized equipment. The equipment has a life of 5 years, belongs in a 30% CCA class, and will have a residual value of $40,000. The cost of debt is 12% for this purchase. A lease on the equipment for 5 years is priced at $150,000 a year (payments starting at the beginning of the year). Maxine's corporate tax rate is 34%. The lessor has a tax rate of 35%. What is Maxine's break-even lease payment amount?
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