Gatto Manufacturing is considering leasing some equipment. The annual lease payment would be $825,000 per year for six years. The appropriate interest rate is 8 percent and the company is in the 23 percent tax bracket.

What reduction in debt capacity would occur if the company signs the lease? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Problem 21-12 Debt Capacity Gatto Manufacturing is considering leasing some equipment. The annual lease payment would be $825,000 per year for six years. The appropriate interest rate is 8 percent and the company is in the 23 percent tax bracket. What reduction in debt capacity would occur if the company signs the lease? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Reduction in debt capacity