Asked by
Samantha Blair
on Dec 08, 2024
Verified
Saturn, Inc. is trying to decide whether to lease or buy some new equipment. The equipment costs $38,000, has a 3-year life and will be worthless after the 3 years. The equipment will be replaced. The cost of borrowed funds is 8 percent and the tax rate is 34 percent. The equipment can be leased for $14,500 a year. What is the amount of the after-tax lease payment?
A) $4,930
B) $5,333
C) $9,570
D) $12,667
E) $14,500
After-Tax Lease Payment
The lease payment amount remaining after deducting taxes applicable on it.
Borrowed Funds
Money obtained through loans or debt financing, which must be repaid with interest over time.
Tax Rate
The percentage at which an individual or corporation is taxed, which can vary depending on income levels and types of income or gains.
- Compute post-tax lease payments and comprehend their influence on financial choices.
Verified Answer
JH
Learning Objectives
- Compute post-tax lease payments and comprehend their influence on financial choices.