Assume that there is a .4 marginal tax rate. An asset with a life of three years

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Assume that there is a .4 marginal tax rate. An asset with a life of three years can be bought for $25,313 or leased for $10,000 per year. Funds can be borrowed at a cost of.09 (payments of SIO,OOO per year).

a. What is the present value ofthe debt (the liability) ifthe funds are $10,000 per year.

b. What is the present value ofthe lease payments of $10,000 (the liability)?

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The Capital Structure Decision

ISBN: 9781402072994

1st Edition

Authors: Harold Bierman

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Question Posted: Jun 10, 2024 02:06 AM

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Assume that there is a .4 marginal tax rate. An asset with a life of three years

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The Capital Structure Decision

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