Cost of BorrowingCost of Borrowing

Comey Products has decided to acquire some new equipment having a $$180,000$ 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 $0\mathrm{.}3333,0\mathrm{.}4445,0\mathrm{.}1481,$ and

$0\mathrm{.}0741.)$ The firm can borrow at a $7\%$ 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 use when comparing purchasing to leasing and has hired you to answer

this question. What is the correct answer to Comey's question? $($Hint: Use the shortcut method to find the after$-$tax cost of the loan

payments.$)$ Do not round intermediate calculations. Round your answer to the nearest dollar.

Comey Products has decided to acquire some new equipment having a $$180,000$ 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 $0\mathrm{.}3333,$

$0\mathrm{.}4445,0\mathrm{.}1481,$ and $0\mathrm{.}0741.)$ The firm can borrow at a $7\%$ 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 use when comparing

purchasing to leasing and has hired you to answer this question. What is the correct answer to Comey's question?

$($Hint: Use the shortcut method to find the after$-$tax cost of the loan payments.$)$ Do not round intermediate

calculations. Round your answer to the nearest dollar.

$