mey Products has decided to acquire some new equipment having a $190,000 purchase price. The equipm ss. (The depreciation rates for Year 1 through Year 4 are equal to 0.3333, 0.4445, 0.1481, and 0.0741.) 1 deral-plus-state tax rate. Comey is considering leasing the property but wishes to know the cost of borrow leasing and has hired you to answer this question. What is the correct answer to Comey's question? (Hint the loan payments.) Do not round intermediate calculations. Round your answer to the nearest dollar.
mey Products has decided to acquire some new equipment having a $190,000 purchase price. The equipm ss. (The depreciation rates for Year 1 through Year 4 are equal to 0.3333, 0.4445, 0.1481, and 0.0741.) 1 deral-plus-state tax rate. Comey is considering leasing the property but wishes to know the cost of borrow leasing and has hired you to answer this question. What is the correct answer to Comey's question? (Hint the loan payments.) Do not round intermediate calculations. Round your answer to the nearest dollar.
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 9P
Related questions
Question
![Cost of Borrowing
Comey Products has decided to acquire some new equipment having a $190,000 purchase price. The equipment will last 4 years and is in the MACRS 3-year
class. (The depreciation rates for Year 1 through Year 4 are equal to 0.3333, 0.4445, 0.1481, and 0.0741.) The firm can borrow at a 11% rate and pays a 25%
federal-plus-state tax rate. Comey is considering leasing the property but wishes to know the cost of borrowing that it should use when comparing purchasing
to leasing and has hired you to answer this question. What is the correct answer to Comey's question? (Hint: Use the shortcut method to find the after-tax cost
of the loan payments.) Do not round intermediate calculations. Round your answer to the nearest dollar.
$](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F70a9835a-abf3-47fa-b869-1c3f080847f8%2F545ed624-7abf-420c-8d65-7fba35853208%2Fz6a32rf_processed.png&w=3840&q=75)
Transcribed Image Text:Cost of Borrowing
Comey Products has decided to acquire some new equipment having a $190,000 purchase price. The equipment will last 4 years and is in the MACRS 3-year
class. (The depreciation rates for Year 1 through Year 4 are equal to 0.3333, 0.4445, 0.1481, and 0.0741.) The firm can borrow at a 11% rate and pays a 25%
federal-plus-state tax rate. Comey is considering leasing the property but wishes to know the cost of borrowing that it should use when comparing purchasing
to leasing and has hired you to answer this question. What is the correct answer to Comey's question? (Hint: Use the shortcut method to find the after-tax cost
of the loan payments.) Do not round intermediate calculations. Round your answer to the nearest dollar.
$
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