Question
FINA5352 Corp. is considering leasing an asset out. Here are the relevant facts: $900,000 Straight line over 6 years to a zero residual value
FINA5352 Corp. is considering leasing an asset out. Here are the relevant facts: $900,000 Straight line over 6 years to a zero residual value 6 years $180,000 per year, at the beginning of years 1, ..., 6. $30,000 Asset cost Depreciation Lease term Lease payment Asset residual market value at the end of the lease term Tax rate 40% 12% Interest rate a. Should FINA Corp. lease the asset out? Please show a detailed cash flow analysis in Excel. b. Please find the minimum lease payment that FINA5352 Corp. will accept (rounding to the nearest dollar).
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a To determine whether FINA5352 Corp should lease the asset out we need to compare the present value of cash inflows lease payments and residual value ...Get Instant Access to Expert-Tailored Solutions
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Financial Modeling
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