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Dole Company (Lessee) desires to lease a piece of equipment from Deere & Company (Lessor). The equipment will cost $100,000. The lease term will be
Dole Company (Lessee) desires to lease a piece of equipment from Deere & Company (Lessor). The equipment will cost $100,000. The lease term will be 5 years. Lease payments will be made at the beginning of each year. Deere expects to depreciate the equipment on a straight line basis to 0. The salvage value is expected to be $10,000. Deeres tax rate is 40%, and its opportunity cost is 11%. What lease payment should Deere charge Dole for the equipment?
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