Problem:
Precision Tool is trying to decide whether to lease or buy some new equipment for its tool and die operations. The equipment costs $51,000, has a 3-year life and will be worthless after the 3 years. The pre-tax cost of borrowed funds is 9 percent and the tax rate is 33 percent. The equipment can be leased for $17,500 a year.
Required:
Question: What is the net advantage to leasing?
Note: Please answer in proper manner and show all computations