Question
In the following case, what are the steps to calculate the monthly lease payment? I am only given the total lease payment of $1,500,000. Raymond
In the following case, what are the steps to calculate the monthly lease payment? I am only given the total lease payment of $1,500,000.
Raymond Rayon Corporation wants to expand its manufacturing facilities. Liberty Leasing Corporation has offered Raymond Rayon the opportunity to lease a machine for $1,500,000 for six years. The machine will be fully depreciated by the straight-line method. The corporate tax rate for Raymond Rayon is 25 percent, whereas Liberty Leasing has a corporate tax rate of 40 percent. Both companies can borrow at 8 percent. Assume lease payments occur at year-end. What is Raymonds reservation price? What is Libertys reservation price?
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