Green valley farms is considering either leasing or buying, Ask an Expert

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Green Valley Farms is considering either leasing or buying some new farm equipment, which is expected to generate $26,000 worth of sales every year in the next 3 years. The lessor will charge S23,000 a year lease. The purchase price is $57,000. The equipment has a 3-year life after which time it will be worthless. Green Valley Farms uses straight-line depreciation, pays zero taxes, and borrows money at 9 percent. What is the net advantage to leasing (ie, NPV for leasing over buying)? Should Green Valley Farms buy or lease the equipment?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92861089

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