Question: NO EXCEL PLEASE show steps and formulas used PLEASE NO EXCEL Lokit Inc. is deciding whether to buy or lease equipment. The equipment costs $2.5

NO EXCEL PLEASE

show steps and formulas used

PLEASE NO EXCEL

Lokit Inc. is deciding whether to buy or lease equipment. The equipment costs $2.5 million and it will be worth zero after three years. The company's borrowing rate is 4.5%. The lease payments are $900,000 million per year for three years, payable at the beginning of each year. The equipmery qualifies for a CCA rate of 24% per year. The assets pool remains open and the company's tax rate is 29%. 1) Should the company buy or lease the asset? 2) Assume the lessor's tax rate is 29%. Is the lease profitable to the lessor? 3) What payment would leave the company indifferent to leasing or not leasing

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