Jamestown Industries is contemplating the acquisition of some new equipment. The purchase price is $40,000. The equipment has a 4-year life after which time it will be worthless. Furthermore, lease qualifies as tax lease. The equipment belongs in a 35 percent CCA class. The equipment can be leased for $11,000 a year. Payments are made at the beginning of the year. Furthermore, there is an increase in maintenance cost of $15,000, no matter whether the firm decide to buy or lease the new equipment. The firm can borrow money at 7 percent and has a 35 percent tax rate.

Please calculate net advantage to leasing for Jamestown Industriesshow the calculate process