Question
A firm is considering the purchase of a new equipment costing $6,185,805 which qualifies for a 34% CCA rate. This equipment has a 4-year life
A firm is considering the purchase of a new equipment costing $6,185,805 which qualifies for a 34% CCA rate. This equipment has a 4-year life after which it will be worthless. The firm can lease it for $1,880,280 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 36%, and the pre-tax cost of borrowing is 9.22%. What would the lease payment have to be for both the lessor and lessee to be indifferent to the lease? Question 17 options: $1,806,586 $1,855,413 $1,904,240 $1,953,066 $2,001,893
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