The cost of a 10 year lease adds $200,000 per year in after tax cash flows, compared to using a loan to purchase the asset. Ceteris paribus, and given a usable life of 10 years with no salvage value, what is the advantage of a lease given a discount rate of 7%?
A) $200,000
B) $1,400,000
C) $1,800,000
D) $2,000,000
Correct Answer:
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