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ClumZee Movers Leasing Case Consider a firm, ClumZee Movers, that wishes to acquire a delivery truck. The truck is expected to reduce costs by $4,500
ClumZee Movers Leasing Case Consider a firm, ClumZee Movers, that wishes to acquire a delivery truck. The truck is expected to reduce costs by $4,500 per year. The truck costs $25,000 and has a useful life of 5 years. If the firm buys the truck, they will depreciate it straight-line to zero. They can lease it for 5 years from Tiger Leasing with an annual lease payment of $6,250. Suppose ClumZee movers is actually in the 25% tax bracket and Tiger Leasing is in the 34% tax bracket. If Tiger reduces the lease payment to $6,200, can both firms have a positive NPV? Ri= 5%
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