CBD has recently decided to build a new processing plant. Process Engineering can provide this plant for
Fantastic news! We've Found the answer you've been seeking!
Question:
Agri-lease Ltd has offered Cannasouth a lease on this equipment for 8 years with annual (start of year) lease payments of $350,000. Agri-lease Ltd has a borrowing rate of 3.5%
Cannasouth enjoys a very low tax rate of 20% as they have yet to generate any operating income and Agri-Lease Ltd has a tax rate of 38%. The WACC for Cannasouth is 9.0%
What is the minimum lease payment that Agri-Lease Ltd could offer without diminishing value to its shareholders?
Related Book For
Spreadsheet Modeling & Decision Analysis A Practical Introduction to Management Science
ISBN: 978-0324656633
5th edition
Authors: Cliff T. Ragsdale
Posted Date: