Connell Finance is determining payments for a 4-year finance lease with a 20 per cent residual on an asset that costs $800 000 and can be depreciated on a straight-line basis over 3 years. The tax rate for Connell is 30 per cent, and it requires a before-tax rate of return from leases of 12 per cent. Determine the lease payments when the lease payments are made: a) annually in advance b) quarterly in advance. Suppose that the lease rentals are payable annually in advance and the terms of the lease are changed so that it is an operating lease. Will the rentals be higher or lower than your answer to (a)? Give reasons for your answer.

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a There are four payments in total The first payment is 800000102 640000 The second payment is 80000... View the full answer