Business, 05.05.2020 08:00 jazminpagan15

Audi Co. 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 after-tax annual lease payment (i. e., including the lease payment tax-shield) is $6,800. What is the value of the lease? Should the firm purchase the asset via debt-financing or sign a long-term financial lease agreement?

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Audi Co. is trying to decide whether to lease or buy some new equipment for polishing vehicles. The...