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Banana Inc. is considering either purchasing or leasing a $600,000 piece of specialized equipment. The equipment has a life of 5 years, belongs in a
Banana Inc. is considering either purchasing or leasing a $600,000 piece of specialized equipment. The equipment has a life of 5 years, belongs in a 30% CCA class, and will have no residual value. The cost of debt is is 12% for this purchase. A lease on this equipment for 5 years is priced at $150,000 a year. Banana Inc.'s corporate tax rate is 34%. What is Banana Inc.'s break-even lease payment?
a) $182,968
b) 170,802
c) $109,057
d) $133,677
e) $155,980
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