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Look Ahead Company has decided to acquire a time machine. Its cost is $60,000. In five years it can be salvaged for $18,000. Friendly
Look Ahead Company has decided to acquire a time machine. Its cost is $60,000. In five years it can be salvaged for $18,000. Friendly Loansharks has agreed to advance funds for the entire purchase price at 10 percent per annum payable in equal instalments at the end of each year over the five years. As an alternative, the machine could be leased over the five years from the manufacturer, Ageless Ventures, with annual lease payments of $12,400 payable at the beginning of each year. Look Ahead's tax rate is 30 percent. Traveling machines have a CCA rate of 30 percent. If the machine is owned, annual maintenance costs will be $600. Should Look Ahead lease or buy its machine? Show all calculations.
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