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Carmichael Cleaners needs a new steam finishing machine that costs $ 1 0 0 , 0 0 0 . The company is evaluating whether it
Carmichael Cleaners needs a new steam finishing machine that costs $ The company
is evaluating whether it should lease or purchase the machine. The equipment falls into the
MACRS year class, and it would be used for years and then sold, because the firm plans
to move to a new facility at that time. The estimated value of the equipment after years is
$ A maintenance contract on the equipment would cost $ per year, payable at
the beginning of each year. Alternatively, the firm could lease the equipment for years for a
lease payment of $ per year, payable at the beginning of each year. The lease would
include maintenance. The firm could obtain a year simple interest loan, interest payable at
the end of the year, to purchase the equipment at a beforetax cost of The firm is in the
tax bracket. If there is a positive Net Advantage to Leasing the firm will lease the
equipment. Otherwise, it will buy it What is the NAL? Note: Assume MACRS rates for
Years to are and
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