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Suppose Clorox can lease a new computer data processing system for $975,000 per year for five years. Alternatively, it can purcluse the system for $4.25
Suppose Clorox can lease a new computer data processing system for $975,000 per year for five years. Alternatively, it can purcluse the system for $4.25 million. Assume Clorox las borrowing cost of 7% and a tax rate of 35%, and the system will be obsolete at the end of five years. a. If Clorox will depreciate the computer equipment on a straight-line basis over the next five years, and if the lease qualifies as a true tax lense, is it better to lease or finance the purchase of the equipment? b. Explain your results and make a conclusion what is better lease or buy
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