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Question – A co. wants a machine costing $20,000. It can either borrow the money from its bank at a pre tax cost of 7%( post tax 5%) or lease the machine for three years at an annual cost of 9300 in arrears. The tax rate is 30% and the lease payment qualify for tax relief at the time of payment.
What is the present value of the lease payment ?
Please do not type out full questions and expect to be provided with a full answer. You must have an answer in the same book in which. you found the question, so ask about whatever it is in the answer that you are not clear about and then I will explain.
Have you watched my free lectures on lease and buy where the approach is all explained?
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