Knight Motors is considering either leasing or buying some new equipment. The lease payments would be $14,500 a year for 3 years. The purchase price is $52,000. The equipment has a 3-year
Life and then is expected to have a resale value of $12,000. Knight Motors uses straight-line
Depreciation, borrows money at 9 percent, and has a 35 percent tax rate. What is the net
Advantage to leasing?
A) -$2,742
B) -$2,212
C) -$1,611
D) $3,529
E) $3,898

Question

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The Answer of Knight Motors is considering either leasing or buying some new equipment. The lease payments would be $14,500 a year for 3 years. The purchase price is $52,000. The equipment has a 3-year
Life and then is expected to have a resale value of $12,000. Knight Motors uses straight-line
Depreciation, borrows money at 9 percent, and has a 35 percent tax rate. What is the net
Advantage to leasing?
A) -$2,742
B) -$2,212
C) -$1,611
D) $3,529
E) $3,898

Knight Motors Is Considering Either Leasing or Buying Some New