N and M Corp. is considering leasing a new machine for $15,000 per year. The lease...

 

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N and M Corp. is considering leasing a new machine for $15,000 per year. The lease arrangement calls for a 5-year lease with an option to purchase the machine at the end of the lease for $3,500. The firm is in the 25% tax bracket. What is the present value of the lease outflows, including the purchase option, if lease payments are made at the end of each year and if the after-tax cost of debt is 7%? The annual after-tax lease payment is $ (Round to the nearest dollar.) N and M Corp. is considering leasing a new machine for $15,000 per year. The lease arrangement calls for a 5-year lease with an option to purchase the machine at the end of the lease for $3,500. The firm is in the 25% tax bracket. What is the present value of the lease outflows, including the purchase option, if lease payments are made at the end of each year and if the after-tax cost of debt is 7%? The annual after-tax lease payment is $ (Round to the nearest dollar.)

Answer rating: 100% (QA)

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