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You have been hired to evaluate a lease or purchase decision for Webs Precious Metals. Webs could purchase a $ 539,294 diamond head drill or

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You have been hired to evaluate a lease or purchase decision for Webs Precious Metals. Webs could purchase a $ 539,294 diamond head drill or lease it for $ 154,650 per year for 5. The equipment has a 5 year life and is in a 29 % CCA class. It will have no residual value at the end of the lease. The cost of debt for this type of purchase is 13%. Webs pays taxes at a corporate rate of 30 %. The lessor has a tax rate of 33 %. Assume all payments are due at the beginning of the year and Webs will keep the asset pool open. What is the net advantage to leasing for the LESSOR

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