The Company Would Like To Buy A Machine For 25

Question

The company would like to buy a machine for 25 mil. USD. Machine would be depreciated for 3 years using 3-years MACRS method. Company has following options: Loan: maturity 3 years, monthly payment, in…

The company would like to buy a machine for 25 mil. USD. Machine
would be depreciated for 3 years using 3-years MACRS method.
Company has following options: Loan: maturity 3 years, monthly
payment, interest 6 % p.a., equal annuity payment Leasing: leasing
coefficient 1.25; advanced payment 30 %; maturity 3 years; monthly
payment Corporate tax rate is 19 %. Which type of financing is
better for us?

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