A company is considering leasing a new equipment. The lease least for 5 years. The lease call for 5 payments of $58000 per year with the first payment occurring immediately. The equipment will cost $250,000 to buy and would be straight line depreciation to a zero-salvage value over 5 years. The actual salvage value is negligible because of technological obsolescence. The firm can borrow at a rate of 6%. The corporate tax rate is 28%. What is the after-tax flow from leasing relative to the after-tax cash flow from purchasing in year 0?

A company is considering leasing a new equipment. The lease least for 5 years. The lease call for 5 payments of $58000 per year with the first payment occurring immediately. The equipment will cost $250,000 to buy and would be straight line depreciation to a zero-salvage value over 5 years. The firm can borrow at a rate of 6%. The corporate tax rate is 27%. What is the NPV of the lease relative to the purchase If the asset has a pre tax salvage value of $41,000.