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Montclair Manufacturing is considering leasing some equipment. The annual lease payment would be $ 7 8 5 , 0 0 0 per year for seven

Montclair Manufacturing is considering leasing some equipment. The annual lease payment would be $

785, 000

per year for seven years. The appropriate interest rate is

8

percent and the company is in the

22

percent tax bracket. What reduction in debt capacity would occur if the company signs the lease?

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