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12-62 LoTech Welding can buy a computer package for $175,000 and depreciate it as a CCA Class 43 asset (45%). Annual maintenance would be $9,800,
12-62 LoTech Welding can buy a computer package for $175,000 and depreciate it as a CCA Class 43 asset (45%). Annual maintenance would be $9,800, and its salvage value after eight years is $15,000. The package can also be leased for $35,000 a year on an "all costs" inclusive lease (maintenance costs included). Lease payments are due at the beginning of each year, and they are tax-deductible. The firm's combined tax rate is 29%. If the firm's after-tax interest rate is 9%, which alternative has the lower EUAC, and by how much? 12-62 LoTech Welding can buy a computer package for $175,000 and depreciate it as a CCA Class 43 asset (45%). Annual maintenance would be $9,800, and its salvage value after eight years is $15,000. The package can also be leased for $35,000 a year on an "all costs" inclusive lease (maintenance costs included). Lease payments are due at the beginning of each year, and they are tax-deductible. The firm's combined tax rate is 29%. If the firm's after-tax interest rate is 9%, which alternative has the lower EUAC, and by how much
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