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Dundee Corporation is planning to lease a machine for the next five years for an annual lease payment of $2500 paid in advance, plus an initial fee of $1000. There is a one-year delay for the tax benefits of lease payments and the fee. Dundee may buy the machine, depreciate it fully over the next five years, and then sell it for 15% of the purchase price. Dundee can borrow the money at 9% interest rate to finance the purchase, and its tax rate is 30%. find out the price of the machine, which will make purchasing or leasing to be equally costly.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M970245

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