Angie Corporation is evaluating whether to lease or purchase equipment. Its tax rate is 30 percent. If...

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Angie Corporation is evaluating whether to lease or purchaseequipment. Its tax rate is 30 percent. If the companypurchases the equipment for $2,000,000 it will depreciate it over 4years, using straight-line depreciation. No salvage value isexpected. If the company enters into a 4-year lease, thelease payment is $600,000 per year, payable at the beginning ofeach year. If the company purchases the equipment it will borrowfrom its bank at an interest rate of 10 percent.
Calculate the cost of leasing the equipment.

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Angie Corporation is evaluating whether to lease or purchaseequipment. Its tax rate is 30 percent. If the companypurchases the equipment for $2,000,000 it will depreciate it over 4years, using straight-line depreciation. No salvage value isexpected. If the company enters into a 4-year lease, thelease payment is $600,000 per year, payable at the beginning ofeach year. If the company purchases the equipment it will borrowfrom its bank at an interest rate of 10 percent. Calculate the cost of leasing the equipment.