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Cost of Borrowing Comey Products has decided to acquire some new equipment having a $220,000 purchase price. The equipment will last 4 years and is
Cost of Borrowing Comey Products has decided to acquire some new equipment having a $220,000 purchase price. The equipment will last 4 years and is in the MACRS 3-year class. (The depreciation rates for Year 1 through Year 4 are equal to 0.3333, 0.4445, 0.1481, and 0.0741.) The firm can borrow at a 10% rate and pays a 25% federal-plus-state tax rate. Comey is considering leasing the property but wishes to know the cost of borrowing that it should
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