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Your company is considering the purchase of a fleet of cars for $200,000. It can borrow...

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Finance

Your company is considering the purchase of a fleet of cars for$200,000. It can borrow at 6%. The cars will be used for fouryears. At the end of four years, they will be worthless. You call aleasing agent and find that the cars can be leased for $55,000 peryear. The corporate tax rate is 34% and the cars belong in CCAclass 10 (a 30% class), what is the net advantage to leasing?

Select one:

a. $1,802

b. $3,434

c. $1,134

d. $3,961

e. $5,399

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Transcribed Image Text

Your company is considering the purchase of a fleet of cars for$200,000. It can borrow at 6%. The cars will be used for fouryears. At the end of four years, they will be worthless. You call aleasing agent and find that the cars can be leased for $55,000 peryear. The corporate tax rate is 34% and the cars belong in CCAclass 10 (a 30% class), what is the net advantage to leasing?Select one:a. $1,802b. $3,434c. $1,134d. $3,961e. $5,399

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