Your ﬁrm is considering either leasing or buying some new equipment that belongs in a 20 percent CCA class. The lease payments will be $5,600 a year. The purchase price is $15,900. The
Equipment has a 3-year life after which time it is expected to have a resale value of $400. Your ﬁrm
Borrows money at 7.5 percent, and has a 35 percent tax rate. What is the net advantage to leasing?
A) $24
B) $211
C) $860
D) $901
E) $1,189

Question

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The Answer of Your ﬁrm is considering either leasing or buying some new equipment that belongs in a 20 percent CCA class. The lease payments will be $5,600 a year. The purchase price is $15,900. The
Equipment has a 3-year life after which time it is expected to have a resale value of $400. Your ﬁrm
Borrows money at 7.5 percent, and has a 35 percent tax rate. What is the net advantage to leasing?
A) $24
B) $211
C) $860
D) $901
E) $1,189

Your ﬁRm Is Considering Either Leasing or Buying Some New