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Suppose that Delta plans to purchase or lease $100M worth of planes. If purchased, the plane will be depreciated on a straight-line basis over five

Suppose that Delta plans to purchase or lease $100M worth of planes. If purchased, the plane will be depreciated on a straight-line basis over five years, after which it will be worthless (this is not a very durable plane). If leased, the annual lease payment will be $22M per year for five years. Assume Deltas borrowing cost is 5%, its tax rate is 20%. Should Delta lease or buy the plane?

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