Russo Industries Is Considering the Purchase of Some New Equipment

question 216

Multiple Choice

Russo Industries is considering the purchase of some new equipment costing $84,000. This equipment has a 3-year life after which it will be worthless. The firm uses straight-line depreciation and borrows funds at a 10 percent rate of interest. The company's tax rate is 34 percent. The firm also has the option of leasing the equipment. What is the amount of the break-even lease payment?

• A) $22,255
• B) $36,540
• C) $31,775
• D) $33,719
• E) $34,897

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