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Imagine you are a CFO for a company that is contemplating leasing some machinery for the operations. The machinery costs- $18600000 and would be depreciated

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Imagine you are a CFO for a company that is contemplating leasing some machinery for the operations. The machinery costs- $18600000 and would be depreciated straight-line to zero over 13 years. Because of the state of the economy, both you and the lessor are evaluating this project for four years. You can lease the machinery for $341250 per year for the four years. Assume that your tax rate is 53% and that of the lessor is 51%. You can borrow at 12.5% before taxes. NOTE: Regardless of the amount of years of depreciation, you will evaluate the project for four years a. What would be the net present value of the cash flows for the lessee? HINT: Compute the net present value for the lessee. What are his benefits, what are his costs? NOTE: Write the number. Do not answer in millions or in thousands. If your answer is 23,254,267.6849 answer 23254267.6849. b. What would be the net present value of the cash flows for the lessor? HINT: Compute the net present value for the lessor. What are his benefits, what are his costs? NOTE: Write the number. Do not answer in millions or in thousands. If your answer is 23,254,267.6849 answer 23254267.6849. C. What would be the maximum payment that a lessee would be willing to pay? NOTE: Write the number. Do not answer in millions or in thousands. If your answer is 23,254,267.6849 answer 23254 67.6849. NOTE: WRITE the absolute value of the number, if the number is negative, write it as a positive. d. What would be the minimum payment that a lessor would be willing to accept? NOTE: Write the number. Do not answer in millions or in thousands. If your answer is 23,254,267.6849 answer 23254267.6849. NOTE: WRITE the absolute value of the number, if the number is negative, write it as a positive. e. Would there be a deal between the lessee and lessor? NOTE: Answer " Y " for yes and "N" for no

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