Paisley company needs a new machine which it can depreciate, Ask an Expert

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Paisley Company needs a new machine, which it can depreciate completely on a straight-line basis over a period of 4 years. Alternately, it can lease the machine for four years, paying $11,000 in lease payments in advance each year and claiming the tax benefit at the end of the year. The tax rate of Paisley is 33% and it can borrow money at 10% interest rate. Calculate the purchase price of the machine, which will equalize the cost of leasing to the cost of buying.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91619457

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