Steven's Auto Detailers is trying to decide whether to lease or buy some new equipment for polishing vehicles. The equipment costs $22,000, has a 3-year life, and will be worthless after the 3 years. The aftertax discount rate is 6.2 percent. The annual depreciation tax shield is $1,760 and the aftertax annual lease payment is $6,650. What is the net advantage to leasing?

Question

Quizplus · Accepted Answer

NAL = $22,000 - ($6,650 + $1,760) (PVIFA_{6.2%, 3}) = -$397.11

Steven's Auto Detailers Is Trying to Decide Whether to Lease