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A Lessor Will Charge $30,500 a Year for a Five-Year

Question 63

Multiple Choice

A lessor will charge $30,500 a year for a five-year lease on equipment costing $136,000. The equipment has a 5-year life after which time it will be worthless. The lessee uses straight-line depreciation, has a tax rate of 21 percent, and borrows money at 8 percent. What is the net advantage to leasing?


A) $10,574
B) $5,507
C) $12,638
D) $6,283
E) $11,528

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