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Carrion Luggage, Inc. needs to decide whether to buy or lease a new machine.
Carrion Luggage, Inc. needs to decide whether to buy or lease a new machine. The purchase price of the machine is $50,000, and it would be depreciated straight-line to zero over the next 4 years, at which time the machine would be worthless. As an alternative, you could lease the machine by paying $15,000 per year over the next 4 years. If Carrion's corporate tax rate is 30% and its cost of secured debt is 12% p.a., should it lease or buy the machine? MUST SHOW WORK.
Please upload ONLY Microsoft excel or pdf, no office type of doc. Thanks
Year1234 Year01234 Depreciation12500125001250012500 Buy-50000 DiscountTotalFactor = DiscountedDiscountedCashflow 1.12^CashflowsCashflows(Buy)year(Buy)Lease(Lease)-500001...