The Galactic Empire Inc. must purchase $5,000,000 worth of heavy blaster rifles. The Galactic Empire is...

The Galactic Empire Inc. must purchase $5,000,000 worth of heavy blaster rifles. The Galactic Empire is looking into either leasing the weapons or purchasing them. The Galactic Empire has a zero tax rate due to tax loss carry-forwards. The Galactic Empire is considering a 6-year bank loan to finance the weapons. The loan has an interest rate of 9% and would be amortized over 6 years, with 6 end-of-year payments. The Galactic Empire can also lease the weapons for 6 end-of-year payments each for $1,192,000 each. How much larger or smaller is the bank loan payment compared to the lease payment? (Subtract the loan payment from the lease payment).

Expert Solution

jeff jeffy answered 10 months ago

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