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A lease has a term of 3 years and has annual payments of $25,000. The leased asset would cost the company $74,000 to buy and
A lease has a term of 3 years and has annual payments of $25,000. The leased asset would cost the company $74,000 to buy and would be depreciated straight-line to a zero salvage value over 3 years. The actual salvage value is of the asset is negligible. The lessee can borrow at a rate of 12% and has a tax rate of 35%. What is the incremental cash flow of purchasing instead of leasing for Year 3 from the lessees perspective?
-$24,883.33
$24,883.33
$16,250.00
-22,406.67
-$16,250.00
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