PLEASE SHOW YOUR WORK FOR ANSWER Similar to the example in class on How much should you charge for a lease , assume that you have computed Total Cash Flow associated with the costs of purchasing, maintaining, and the tax depreciation effects for an asset you plan to lease The amounts for Total Cash Flow are presented in the seventh row in the table below As shown, the present value of these costs using a 10 discount rate is $1,012 336 What yearly before tax rent must you receive from the lessee so that the present value of the after tax rent equals $1,012 336 (Assume the rents are the same each year, start at time 0 and end at time 7, so there are eight total payments Use a 35 tax rate Calculate the after tax rent first using the 10 discount rate, then use this amount to calculate the before tax rent ) 0 1 2 3 4 5 6 7 Asset cost Maintenance Tax Depreciation Taxable income Tax Benefit (at 35 ) Total Cash Flow PV at 10 After tax rent PV at 10 37 50 79 50 18 45 8 43 24 68 44 84 81 25 81 25 1000 00 1012 336 Calculate 1012 336 Calculate Calculate Calculate Calculate Calculate Calculate Calculate A $243 11 B $257 69 C $265 39 D $285 23 E $291 93 F $295 91 G $310 22 H $331 08

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PLEASE SHOW YOUR WORK FOR ANSWER  Similar to the example in class on  How much should you charge for a lease  , assume that you have computed Total Cash Flow associated with the costs of purchasing, maintaining, and the tax depreciation effects for an asset you plan to lease  The amounts for Total Cash Flow are presented in the seventh row in the table below  As shown, the present value of these costs using a 10  discount rate is $1,012 336  What yearly  before tax  rent must you receive from the lessee so that the present value of the  after tax  rent equals $1,012 336  (Assume the rents are the same each year, start at time 0 and end at time 7, so there are eight total payments  Use a 35  tax rate  Calculate the after tax rent first using the 10  discount rate, then use this amount to calculate the before tax rent ) 0 1 2 3 4 5 6 7 Asset cost Maintenance Tax Depreciation Taxable income Tax Benefit (at 35 ) Total Cash Flow PV at 10  After tax rent PV at 10  37 50 79 50 18 45  8 43  24 68  44 84  81 25  81 25  1000 00  1012 336 Calculate 1012 336 Calculate Calculate Calculate Calculate Calculate Calculate Calculate A  $243 11 B  $257 69 C  $265 39 D  $285 23 E  $291 93 F  $295 91 G  $310 22 H  $331 08

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PLEASE SHOW YOUR WORK FOR ANSWER! Similar to the example in class on How much should you charge for a lease?, assume that you have

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