Sunbelt Rentals is in the business of leasing a variety of heavy equipment to construction companies. The firm wants to develop a daily rental rate for a manlift that is expected to be operated for three years. The piece of equipment costs $41,000 and will require $1,750 in maintenance every year. The lessee will be responsible for all other operating expenses. The asset is classified as a five-year MACRS property and the expected salvage value at the end of the 3 years is $11,000. Sunbelts marginal tax rate is 35% and requires an after-tax return of 10%. History has shown that equipment such as this has a 60% daily utilization (under lease) rate.

1. What should the daily rental rate be set at?
2. Does it make sense to give discounted rates for weekly and monthly rentals? And if so, how much of a discount should be allowed?