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Need answer for question c An asset costs $321,000 and will be depreciated in a straight-line manner over its three-year life. It will have no
Need answer for question c
An asset costs $321,000 and will be depreciated in a straight-line manner over its three-year life. It will have no salvage value. The lessor can borrow at 7 percent, and the lessee can borrow at 10 percent. The corporate tax rate is 34 percent for both companies. Assume that lease payments occur at the end of the year. (Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. Not available in Connect. b. What lease payment amount will make the lessee and the lessor equally well off? Lease payments $ 128,856.56 c. Assume that the lessee pays no taxes and the lessor is in the 34 percent tax bracket. For what range of lease payments does the lease have a positive NPV for both parties? Range more than $ 121,425.33 but less than $ 128,856.56*Step by Step Solution
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