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The Wildcat Oil Company is trying to decide whether to lease or buy a new computer - assisted drilling system for its oil exploration business.
The Wildcat Oil Company is trying to decide whether to lease or buy a new computerassisted drilling system for its oil exploration business. Management has already determined that acquisition of the system has a positive NPV The system costs $ million and qualifies for a CCA rate. The equipment will have a $ salvage value in years. Wildcats tax rate is and the firm can borrow at Southtown Leasing Company has offered to lease the drilling equipment to Wildcat for payments of $ million per year. Southtowns policy is to require its lessees to make payments at the start of the year.
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