A D A1 Corp. is considering leasing an machine from B2, Inc. 0 1 Cost of...

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A D A1 Corp. is considering leasing an machine from B2, Inc. 0 1 Cost of Machine Depreciation 5 Lease term (in years) 5 Lease Payment Tax Rate for A1 Tax Rate for B2 A1 Cost of Borrowing B2 Cost of Borrowing 2 3 A1 Corp -4 Year 5 Lease Rental Cost 6 7 1,000,000 5-year MACRS method with 0 residual value 0 6 200000 at the beginning of years 0, 1, ..., 5. 0.0% A1 has tax-loss which prevents it from additional tax shield 40.0% 10.0% 7.0% 1 E 2 F 3 4 G 5 H (14 points) a. Based on the information given, is it advantageous for both A1 Corp. to lease the machine and for B2 Inc. to purchase the asset in order to lease it out to A1? b. If the answer in part a is yes, then what is the maximum lease payment which A1 will pay and the minimum rental which B2 will accept? $ (200,000.00) $ (200,000.00) $ (200,000.00) $ (200,000.00) $ (200,000.00) $ (200,000.00) $ K 6 M N O Q T U A D A1 Corp. is considering leasing an machine from B2, Inc. 0 1 Cost of Machine Depreciation 5 Lease term (in years) 5 Lease Payment Tax Rate for A1 Tax Rate for B2 A1 Cost of Borrowing B2 Cost of Borrowing 2 3 A1 Corp -4 Year 5 Lease Rental Cost 6 7 1,000,000 5-year MACRS method with 0 residual value 0 6 200000 at the beginning of years 0, 1, ..., 5. 0.0% A1 has tax-loss which prevents it from additional tax shield 40.0% 10.0% 7.0% 1 E 2 F 3 4 G 5 H (14 points) a. Based on the information given, is it advantageous for both A1 Corp. to lease the machine and for B2 Inc. to purchase the asset in order to lease it out to A1? b. If the answer in part a is yes, then what is the maximum lease payment which A1 will pay and the minimum rental which B2 will accept? $ (200,000.00) $ (200,000.00) $ (200,000.00) $ (200,000.00) $ (200,000.00) $ (200,000.00) $ K 6 M N O Q T U