A bustani is considering the lease of an electronic welder, Ask an Expert

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A) Bustani is considering the lease of an electronic welder costing $240,000 from Omni Leasing. The period of the lease will be 6 years. The welder will be depreciated under MACRS rules for a 5-year class assest. Bustani's marginal tax rate is 30%. Annual beginning of the year lease payments will be $60,000. Estimated salvage value is zero. If Bustani's after tax cost of borrowing is 18%, compute the net advantage to leasing. (Problem requires MACRS tables.)

B) Should the lease be accepted or not? Explain why.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92164293

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