Precision tool is trying to decide whether to lease or buy, Ask an Expert

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Precision Tool is trying to decide whether to lease or buy some new equipment for its tool and die operations. The equipment costs $57,000, has a 3-year life and will be worthless after the 3 years. The pre-tax cost of borrowed funds is 8 percent and the tax rate is 34 percent. The equipment can be leased for $19,500 a year. What is the net advantage to leasing? (Do not round intermediate calculations.)

$4,989

$2,248

$-19

$4,635

$3,369

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91600782

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