Jamestown Supply is trying to decide whether to lease or buy some new equipment. The equipment costs $72,000, has a 4-year life,

Question

2 years ago

10

Jamestown Supply is trying to decide whether to lease or buy some new equipment. The equipment costs $72,000, has a 4-year life,

and will be worthless after the 4 years. The equipment will be replaced. The cost of borrowed funds is 9 percent and the tax rate is 34 percent. The equipment can be leased for $23,800 a year. What is the amount of the aftertax lease payment

Business

1 answer:

DochEvi [55] · Answer 1 · 2022-08-10T04:59:58+03:00

Answer:

$15,708

Explanation:

Calculation to determine What is the amount of the aftertax lease payment

Using this formula

Aftertax lease payment=Leased equipment(1-Tax rate)

Let plug in the formula

Aftertax lease payment = $23,800 (1 - 0.34)

Aftertax lease payment=$23,800(.66)

Aftertax lease payment = $15,708

Therefore the amount of the aftertax lease payment is $15,708