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 $6,800.What is the net advantage to leasing?
A)-$796.58
B)-$397.11
C)$184.92
D)$315.40
E)$462.84

Question

Quizplus · Accepted Answer

NAL = $22,000 - ($6,800 + $1,760) (PVIFA_{6.2%, 3}) = -$796.58

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