Mercy Me, Inc. is trying to decide whether to lease or buy some new equipment. The equipment costs $82,000, has a 5-year life, and belongs in a 20 percent CCA class. The equipment will be worthless after the 5 years and will have to be replaced. The company has a tax rate of 35 percent, a cost of borrowed funds of 11 percent. The equipment can be leased for $17,500 a year. What is the amount of the after-tax lease payment?

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The Answer of Mercy Me, Inc. is trying to decide whether to lease or buy some new equipment. The equipment costs $82,000, has a 5-year life, and belongs in a 20 percent CCA class. The equipment will be worthless after the 5 years and will have to be replaced. The company has a tax rate of 35 percent, a cost of borrowed funds of 11 percent. The equipment can be leased for $17,500 a year. What is the amount of the after-tax lease payment?