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Reynolds Imaging needs a piece of diagnostic equipment that costs $ 2 0 0 , 0 0 0 . Reynolds can either 'lease the equipment

Reynolds Imaging needs a piece of diagnostic equipment that costs $200,000. Reynolds can either 'lease the equipment or borrow $200,000 from a local bank and buy the equipment. Reynolds's tax rate is 40 percent, 'and the equipment depreciation would be $100,000 per year. If the company leased the asset on a two-year lease, 'the payment would be $110,000 at the beginning of each year. If Reynolds borrowed and bought, the bank would 'charge 10 percent interest on the loan.

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