A firm can buy a machine for $900,000, takes an investment tax credit of 15%, and lease out the machine for 9 years with lease payments at the beginning of the year, how much should the minimum annual lease payments be? Assume a 5-year straight-line depreciation, zero salvage and tax rate of 40%. Assume further that it can borrow at a before tax rate of 10%.

$67,900

$80,200

$58,300

$72,900

$64,100

Refer to the above question. What would the minimum annual lease payments be if the machine can be salvaged for $200,000 at the end of the lease?

$67,900

$57,500

$54,200

$61,700

$49,300

Refer to the above question. What would the minimum annual lease payments be if the machine can be salvaged for $200,000 at the end of the lease and the after-tax required rate of return is 9%?

$65,800

$77,400

$71,700

$90,100

$78,400