The lessor must calculate how much the lessee must pay in such a way as to guarantee the minimum expected profit. Assume that the landlord will require the tenant to pay in advance. Use the following data to determine: (1) Net cost to the lessor; (2) After Tax Annual Payment; (3) Before Annual Tax payment.

asset cost $10,000,000

useful life of the asset 5 years

discount rate or cost of capital 8.75%

tax rate 35%

linear depreciation

salvage value $0