(Negotiating a lease rate) Amalgamated Leasing Corp. would like to submit a leasing proposal to the Sandoval Hardware Manufacturing Company. Sandoval has asked to lease $5 million worth of equipment under a six-year lease. Amalgamated can depreciate the equipment for tax purposes on a straight-line basis on a straight-line basis over the six year term to an estimated residual value of $250,000. The leasing firms income rate is 40%. Amalgamated has estimated Sandovals six-year cost of funds to be 10% for secured debt (83.33% financing) and 12% for unsecured debt. It has also estimated the required after-tax return for an investment in the assets to be 15%. a. At what lease rate would Amalgamated be indifferent to making the lease? b. Assume Sandoval pays income taxes at a 30% rate. Calculate Sandovals net advantage to leasing at Amalgamateds indifference lease rate. c. At what lease rate would Sandoval be indifferent? d. Is it possible for Amalgamated and Sandoval to find a mutually beneficial lease rate?