The car will be depreciated straight-line to zero

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Your firm would like to buy a car. The car costs $300,000. The dealer is willing to lease you the car for $50,000 a year. Alternatively you could borrow at 10 percent before tax and purchase the car. Assume that the car will be depreciated straight-line to zero over 5 years. The tax rate is 40%. Would you buy or lease the car?

Reference no: EM131348226

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