Affordable Leasing, Inc. (AF) is planning to buy an office computer and lease it to a high school. AF just paid $2,000 in cash this morning to acquire the computer, and the leasing contract starts this afternoon. The local high school will lease the computer for 2 years at a rental charge of $1,250 per year, due at the end of each year. AF will use a 2-year straight line depreciation on the computer. That is, AF will make two 50% depreciations on the computer, one at the end of this year and the other at the end of next year. The computer is estimated to have a residual value of $300 at the end of year two. At the beginning of each year, AF will have to pay Gorilla Geeks $100 per year for maintenance service. AF faces 40% corporate tax, and its after-tax cost of capital is 6%.

Assume the lease follows the IRS guidelines, work out the following table from AFs (lessor) perspective.

	0	1	2
Cost
Depreciation Tax Shield
Maintenance
Tax Savings on Maintenance
Lease Payment
Tax on Lease Payment
Residual Value
Tax on Residual Value
Net Cash Flow