An asset costs $760,000 and will be depreciated in a straight-line manner over its three-year life. It
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Question:
An asset costs $760,000 and will be depreciated in a straight-line manner over its three-year life. It will have no salvage value. The lessor can borrow at 6.5 percent and the lessee can borrow at 8 percent. The corporate tax rate is 24 percent for both companies. |
a. | What lease payment will make the lessee and the lessor equally well off? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
Lease payment= _________
b. | Assume that the lessee pays no taxes and the lessor is in the 24 percent tax bracket. For what range of lease payments does the lease have a positive NPV for both parties? (Enter your answers from lowest to highest. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
Related Book For
Corporate Finance
ISBN: 978-0077861759
11th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
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