Your firm is considering lease financing for a computer that is expected to have a five-year life and no salvage value (it is a strict financial lease). You have the following facts:
• Your firm's tax rate is 30%. There is no investment tax credit.
• If purchased, the project would require a capital outlay of $100,000.
• The project will be depreciated using the straight-line method.
• Debt of equivalent risk costs 10% before taxes.
• The annual lease fee is $32,000 paid at the beginning of each year for five years.
• The optimal capital structure for the project is 50% to total assets.
Should you use lease financing or not?