Steven's Auto Detailers Is Trying to Decide Whether to Lease

Steven's Auto Detailers is trying to decide whether to lease or buy some new equipment for polishing vehicles.The equipment costs $22,000,has a 3-year life,and will be worthless after the 3 years.The aftertax discount rate is 6.2 percent.The annual depreciation tax shield is $1,760 and the aftertax annual lease payment is $6,800.What is the net advantage to leasing?

A) -$796.58
B) -$397.11
C) $184.92
D) $315.40
E) $462.84

Correct Answer:

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