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Question: What is the net advantage to leasing? An auto dealer is trying to decide whether to lease or buy new equipment for polishing vehicles.

Question: What is the net advantage to leasing?

An auto dealer is trying to decide whether to lease or buy new equipment for polishing vehicles.

Cost of the equipment : $22,000.00

Useful life : 3years (Worthless after 3 years)

After tax discount rate is 2%

Annual depreciation tax shield : $1,760.00

After tax annual lease payment : $6,800.00

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