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?
A) -$36,209
B) -$18,104
C) $18,104
D) $36,209
E) $77,537

Question

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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?
A) -$36,209
B) -$18,104
C) $18,104
D) $36,209
E) $77,537

Calipers and More Is Weighing a Lease Versus a Purchase