Reynolds imaging needs a piece of diagnostic equipment that cost $200 THOUSAND. Reynolds can either lease the equipment or borrow $ 200 thousand from a local bank and buy the equipment. Reynold's tax rate is 40 percent, and the equipment depreciation would be $100 thousand per year. If the company leased the asset on a two-year lease, the payment would be $110 thousand at the beginning of each year. If Reynolds borrowed and bought, the bank would charge 10 percent on the loan. Should Reynolds buy or lease the equipment?
