Question
Consider a firm A that wishes to acquire an equipment. The equipment is expected to reduce costs by $3600 per year. The equipment costs $27000
Consider a firm A that wishes to acquire an equipment. The equipment is expected to reduce costs by $3600 per year. The equipment costs $27000 and has a useful life of 5 years. If the firm buys the equipment, they will depreciate it straight-line to zero over 5 years and dispose of it for nothing. They can lease it for 5 years with an annual lease payment of $8000. If the after-tax interest rate on secured debt issued by company A is 4% and tax rate is 35%, what is the Net Advantage to Leasing (NAL)?(keep two decimal places)
NOTE THE ANSWER ISNT 4563.42
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