The Deacon Co. is a pharmaceutical firm that has decided to acquire a new line of centrifuges to improve its productionprocess. They are now trying to determine whether to purchase or lease the centrifuges. These machines cost $48,000 andhave a useful operating life of four years. If they purchase the centrifuges they will be depreciated over their four-year life bythe straight-line method. The Deacon Co. pays taxes at a rate of 21% under the TCJA and their before tax borrowing cost is6%. Based on this information what is the breakeven lease payment below which it is economical for The Deacon Co. to leasethe centrifuges?O $13,841.65O$13,454.91O $12,688.18$14,995.13$10,934.91

NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…

Answered: The Deacon Co. is a pharmaceutical firm…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 11P

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