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Business, 31.07.2019 12:30 kam110800

To finance some manufacturing tools it needs for the next 3 years, waldrop corporation is considering a leasing arrangement. the tools will be obsolete and worthless after 3 years. the firm will depreciate the cost of the tools on a straight-line basis over their 3-year life. it can borrow $4,800,000, the purchase price, at 10% and buy the tools, or it can make 3 equal end-of-year lease payments of $2,140,000 each and lease them. the loan obtained from the bank is a 3-year simple interest loan, with interest paid at the end of the year. the firm's tax rate is 40%. annual maintenance costs associated with ownership are estimated at $240,000, but this cost would be borne by the lessor if it leases. what is the net advantage to leasing (nal), in thousands? (suggestion: delete 3 zeros from dollars and work in thousands.)

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