Business, 03.12.2019 07:31, johnjohnthornhi17

Stanley inc. must purchase $6,000,000 worth of service equipment and is weighing the merits of leasing the equipment or purchasing. the company has a zero tax rate due to tax loss carry-forwards, and is considering a 5-year, bank loan to finance the equipment. the loan has an interest rate of 10% and would be amortized over 5 years, with 5 end-of-year payments. stanley can also lease the equipment for 5 end-of-year payments of $1,790,000 each. how much larger or smaller is the bank loan payment than the lease payment? (hint: remember back to our bond pricing concepts and calculate the payment of the bond vs. the lease payment; loan payment - lease payment )

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Stanley inc. must purchase $6,000,000 worth of service equipment and is weighing the merits of leasi...