Question: Precision Tool is trying to decide whether to lease or buy some new equipment for its tool and die operations. The equipment costs $51,000, has

Precision Tool is trying to decide whether to lease or buy some new equipment for its tool and die operations. The equipment costs $51,000, has a 3-year life and will be worthless after the 3 years. The pre-tax cost of borrowed funds is 8 percent and the tax rate is 34 percent. The equipment can be leased for $20,000 a year. What is the net advantage to leasing? (Do not round intermediate calculations.) Please show all work.

thanks,

Greg

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