Furman industries is negotiating a lease on a new piece of


Furman Industries is negotiating a lease on a new piece of equipment which would cost $200,000 if purchased. he equipment falls into the MACTS-3-year class and it would be used for three years and then sold, because Furman plans to move to a ne facility at that time. It is estimated that the equipment could be sold for $30,000 after three years of use. A maintenance contract on the equipment would cost $3000 per year payable at the beginning of each of the three years of usage. Conversely, Furman could lease the equipment for three years for a lease payment of $70,000 per year, payable at the beginning of each year. The lease would include maintenance. Furman is in the 40% tax bracket, and it could obtain three year simple interest loan to purchase THE Equipment at a before tax cost of 10%. What should furman do?

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Financial Management: Furman industries is negotiating a lease on a new piece of
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