Should the company lease the equipments

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Reference no: EM131306769

A company is considering to lease an equipment which has purchasing price of 15,00,000. The equipment has an estimated life of 10 years. As per tax rule the written down depreciation is allowed to 20%. The lease rentals per annum are 3,50,000. The companies marginal tax rate is 33%. If the before tax borrowing rate for the company is 12%.

Should the company lease the equipments.

Reference no: EM131306769

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