A lease has five annual payments of $115,000.The leased asset would cost $500,000 to buy,would be depreciated straightline to a zero salvage value over 5 years,and has an actual salvage value of zero.The firm can borrow at 8 percent on a pretax basis and has a tax rate of 23 percent.What is the net advantage of leasing?

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The Answer of A lease has five annual payments of $115,000.The leased asset would cost $500,000 to buy,would be depreciated straightline to a zero salvage value over 5 years,and has an actual salvage value of zero.The firm can borrow at 8 percent on a pretax basis and has a tax rate of 23 percent.What is the net advantage of leasing?

A Lease Has Five Annual Payments of $115,000