Calipers and More is weighing a lease versus a purchase of some new machinery. The purchase price is $231,800. The equipment has a 4-year life after which time it is expected to have a resale value of $68,000. The equipment belongs in a 30 percent CCA class and the firm can borrow money at 9.5 percent. The equipment can be leased for $62,900 a year for 4 years. Calipers does not expect to owe any taxes for the next 4 years because of accumulated net operating losses. What is the net advantage to leasing?

Question

Quizplus · Accepted Answer

The Answer of Calipers and More is weighing a lease versus a purchase of some new machinery. The purchase price is $231,800. The equipment has a 4-year life after which time it is expected to have a resale value of $68,000. The equipment belongs in a 30 percent CCA class and the firm can borrow money at 9.5 percent. The equipment can be leased for $62,900 a year for 4 years. Calipers does not expect to owe any taxes for the next 4 years because of accumulated net operating losses. What is the net advantage to leasing?

Calipers and More Is Weighing a Lease Versus a Purchase