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An asset costs $ 4 2 0 , 0 0 0 and will be depreciated in a straight - line manner over its three -
An asset costs $ and will be depreciated in a straightline manner over its threeyear life. It will have no salvage value. The
lessor can borrow at percent, and the lessee can borrow at percent. The corporate tax rate is percent for both companies.
Assume the lease payments are made at the end of
each year. Do not round intermediate calculations. Round the final answers to decimal places. Omit $ sign in your response.
a This part of the question is not part of your Connect assignment.
b What lease payment amount will make the lessee and the lessor equally well off?
Lease payments $
c Assume that the lessee pays no taxes and the lessor is in the percent tax bracket. For what range of lease payments does the
lease have a positive NPV for both parties?
Range more than $
but less than $
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