Question
help please with this template given the question above Using the NAL tab, develop an Excel spreadsheet model for the following: Lease Corp. is considering
help please with this template given the question above
Using the NAL tab, develop an Excel spreadsheet model for the following: Lease Corp. is considering a lease to XYZ Corp. for some new manufacturing equipment. The lease would be a 4-year contract with a lease payment of $292,000 per year. In addition, payments for this particular lease are to be made at the end of the year and would include maintenance. If Lease Corp. agrees to lease the item to XYZ Corp, they will have to purchase the equipment outright for $790,000 and also will have to pay the local dealer $22,000 at the end of each year for maintenance service. The equipment falls into the MACRS 3-year class and has a resale value of $45,000. The lessors tax rate is 26% and the lessees tax rate is 34%. Lease Corp. requires a 12.25% after-tax return on equipment it leases, which is also its WACC (i.e., in this problem you only need to use one discount rate). XYZ Corp. has a weighted average cost of capital of 15.76%. You will need to use the PV function to calculate the present value of each relevant cash flow. Use your template to answer the following questions:
Should Lease Corp. write the lease? Why or why not? WRITE HERE:
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