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With favorable growth prospect, Bien Company requires to add new machinery. The machine would cost $500,000...

With favorable growth prospect, Bien Company requires to add new machinery. The machine would cost $500,000 if purchased; It would be depreciated straight-line to zero salvage over 5 years. Alternatively, it may be leased for $110,000/yr. The firm’s borrowing cost of is 7%, and its tax rate is 40%

  1. List the leasing cash flows for year 0 and year 1 – 5.
  2. What is the net advantage to leasing (NAL)?
  3. What decision should be made regarding lease or buy?

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jeff jeffy answered 1 year ago
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