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A lease has five annual payments of $115,000. The leased asset would cost $480,000 to buy, would be depreciated straightline to a zero salvage value
A lease has five annual payments of $115,000. The leased asset would cost $480,000 to buy, would be depreciated straightline to a zero salvage value over 5 years, and has an actual salvage value of zero. The firm can borrow at 8 percent on a pretax basis and has a tax rate of 23 percent. What is the net advantage of leasing?
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