5. The lessor's lease evaluation There are two parties in any lease contract-the lessee and the lessor. To a lessor, a lease analysis involves a captal budgeting analysis of the property or equipment to be leased. The lessor's decision is either to purchase and lease-out the assat, or not muke the invertment at all Wke any capital budgeting decision, the lessor needs to evaluate the rate of return expected to be earned from making the lease. Further, since the cost and other terms of leases involving high-cost items are negotiated, this rate of retum informption is alsa important information for a prospective lessee. From the foliowing statements, identify the steps involved in lease analysis from a lewsor's perspective. Cleck all that appok. Check and eniure that the lessor's cost of capital is more than the rate of return on the lease. Determine periodic cash intlons from the lessee. Determine the net caah outiay of the ieace agreement. Pele Corp. is a professional leasing company. The leasing manager has to evaluato some lease agreements under the following conditions: - The company's marginal federal-plus-state income tax rate is 30%. - The company has alternative investment options of similar risk that yield 5.5096. Assuming all other factors and values are constant among these leases, from the lessor's perspective, which of the following is the best lease? A lease that has an MIRR of 3.05%. A lease that has an NPY of $81,000. A tease that has an tRR of 4.650 . A lease that generates an after-tax rate of return of 3.35%. You probably noticed that lease anaiysis seems a bit like capital budgeting analyais, because the cash flows are estimated aver the life of the project or lease. The precent value of the cash fows dictates the manageris decision. Are cash fows that are estimated in tease analysis mare or less riaky than capitat budgeting casih flows? More risky Less risky