Question
A company is deciding whether to lease or buy new equipment that can be purchased for $33,000. If purchased, the equipment will need to be
A company is deciding whether to lease or buy new equipment that can be purchased for $33,000. If purchased, the equipment will need to be serviced at the end of each year. Consider the following information:
- PVCCATS = $10,000
- PV of Lease Payments Before-Tax = $39,000
- PV of Salvage Value = $6,000
- PV of Lease Payments Tax Shield = $18,000
- PV of Annual Service Costs After-tax = $4,000
Based on the above information, what is the present value of buying?
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Financial Markets and Institutions
Authors: Anthony Saunders, Marcia Cornett
6th edition
9780077641849, 77861663, 77641841, 978-0077861667
