Viewpoint of Lessor

Question 24 (1 point) Overland Corporation is considering a leasing arrangement for a machine for 3 years The firm will depreciate this fixed asset on a 3-year MACRS schedule of 40%, 30%, 20%, and 10%. The machine's cost is $2,100,000. It can borrow 100% of the purchase price at 6% to buy the machine. Alternatively, it can make 3 equal end-of- year lease payments of $900,000 each and lease them. The firm's tax rate is 35%. Annual maintenance costs associated with ownership are estimated at $150,000, but this cost would be borne by the lessor if it leases. The machine can be sold for $250,000 at the end of the third year. What is the net advantage to leasing in thousands? $29.79 $63.4 Onone of the above $84.1 $96.6