Green Valley Farms is considering either leasing or buying some new farm equipment. The lessor will charge

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Green Valley Farms is considering either leasing or buying some new farm equipment. The lessor will charge $21,000 a year lease. The purchase price is $59,000. The equipment has a 3-year life after which time it will be worthless. Green Valley Farms uses straight-line depreciation, has a 32 percent tax rate, borrows money at 8 percent, and has sufficient tax loss carryovers to offset any potential taxable income the firm might have over the next five years. What is the net advantage to leasing?
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Principles Of Managerial Finance

ISBN: 978-0136119463

13th Edition

Authors: Lawrence J. Gitman, Chad J. Zutter

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