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Gatto Manufacturing is considering leasing some equipment. The annual lease payment would be $935,000 per year for six years. The appropriate interest rate is 7

Gatto Manufacturing is considering leasing some equipment. The annual lease payment would be $935,000 per year for six years. The appropriate interest rate is 7 percent and the company is in the 23 percent tax bracket.

What reduction in debt capacity would occur if the company signs the lease?

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