Quartz Corporation is a relatively new firm. Quartz has experienced enough losses during its early years to provide it with at least eight

years of tax loss carryforwards. Thus, Quartz's effective tax rate is zero. Quartz plans to lease equipment from New Leasing Company.

The term of the lease is five years. The lease payments are made at the end of each year. The purchase cost of the equipment is

$$860,000$ and it would be depreciated straight$-$line to zero over five years. New Leasing Company is in the $40$ percent tax bracket.

There are no transaction costs to the lease. Each firm can borrow at $9$ percent. $($Do not round intermediate calculations. Round the

final answers to $2$ decimal places. Omit $ sign in your response.$)$

a$.$ What is Quartz's reservation price?

Reservation price

b$.$ What is New Leasing Company's reservation price?

Reservation price

$An asset costs $$420,000$ 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 the lease payments are made at the end of

each year. $($Do not round intermediate calculations. Round the final answers to $2$ decimal places. Omit $ sign in your response.$)$

a$.$ This part of the question is not part of your Connect assignment.

b$.$ What lease payment amount will make the lessee and the lessor equally well off?

Lease payments $

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 $

but less than $