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Medarex could also purchase the electronic welder for $210,000. The firm would finance the purchase of the machine with a 9%, 6-year loan requiring end
Medarex could also purchase the electronic welder for $210,000. The firm would finance the purchase of the machine with a 9%, 6-year loan requiring end -of-year installment payments of $46,813. It would be depreciated under MACRS using a 5-year recovery period. The firm would pay $1,500 per year for a service contract that covers all maintenance costs. There is no salvage value.
Compute the after-tax cost of purchasing.
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