Presto's Pizza is considering either leasing or buying a new oven. The lease payments would be $7,200 a year for 3 years. The purchase price is $20,000. The equipment has a 3-year life and then is expected to have a resale value of $2,000. Presto's Pizza uses straight-line depreciation, borrows money at 9.5 percent, and has a 34 percent tax rate. What is the net advantage to leasing?

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The Answer of Presto's Pizza is considering either leasing or buying a new oven. The lease payments would be $7,200 a year for 3 years. The purchase price is $20,000. The equipment has a 3-year life and then is expected to have a resale value of $2,000. Presto's Pizza uses straight-line depreciation, borrows money at 9.5 percent, and has a 34 percent tax rate. What is the net advantage to leasing?

Presto's Pizza Is Considering Either Leasing or Buying a New