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Tripple A Manufacturing needs to acquire a piece of equipment which will cost the company $80,000. It is estimated that in six years' time the
Tripple A Manufacturing needs to acquire a piece of equipment which will cost the company $80,000. It is estimated that in six years' time the equipment can be salvaged for $20,000. The company's bank has agreed to advance funds for the entire purchase price at 8 percent per annum operating lease with annual lease payments of $14,000. Triple A's tax rate is 40 percent and its cost of capital is 15 percent. The equipment has a CCA rate of 20 percent. If the machine is owned, annual maintenance costs will be $500. Required: Advise Triple A which alternative they should choose, providing them with calculations to support your recommendation. Enter calculation and answers here
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