Problem 1: A leasing company is planning to purchase an asset for $15,000 with a 6-year life and assume no salvage value. The company can depreciate the asset over its useful life using a straightline depreciation method. The company has just issued five-year notes at an interest rate of 10% per year. Tax rate = 21%. Maintenance (and other) costs = $1,350 per year for years 1-4, $2,200 per year for years 5-6. What is the after-tax break-event rent for this lease if payments occur at the beginning of the periods? (Hint: Use an excel sheet to solve this problem following example on page 8 in Lecture 19. You need to draw the lease cash flow table.)

Problem 2: Redo problem 1 assuming MACRS tax depreciation life = 5 years. Depreciation rates = 20%, 32%, 19.2%, 11.52%, 11.52%, 5.76%