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A firm is considering the purchase of a new equipment costing $6,897,065 which qualifies for a 38% CCA rate. This equipment has a 4-year life
A firm is considering the purchase of a new equipment costing $6,897,065 which qualifies for a 38% CCA rate. This equipment has a 4-year life after which it will be worthless. The firm can lease it for $2,096,480 per year for its useful life. Assume that the firm makes payments at the end of the year, the asset pool remains open, the tax rate is 40%, and the pre-tax cost of borrowing is 10.18%. What would the lease payment have to be for both the lessor and lessee to be indifferent to the lease
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