You are working for Satellite Broadcasting (SBC), a producer of parts for classic cars. SBC needs a new satellite that costs $640,000. SBC can borrow at 8.0%. The satellite will be useful for three years after which SBC will have to buy a replacement. The CCA class has 40% depreciation rate and continues indefinitely. SBC can lease the equipment from the supplier, Precise Communications, for $180,000 per year. Lease payments are due at the beginning of the year, but the tax breaks are realized at the end of the year. SBC's marginal tax rate is 30%. You are asked to decide whether to buy or lease satellite.

 a)Should SBC buy or lease the equipment? Show calculations, partial marks will be given for clearly identifiable steps.  

Answer rating: 100% (QA)

lets break down the solution step by step Step 1 Calculate the Cost of Buying the Satellite The cost ... View the full answer