Question
The Mikata Corporation is considering leasing a machine. The machine would cost $226,000 to buy and it would be depreciated straight-line to zero over five
The Mikata Corporation is considering leasing a machine. The machine would cost $226,000 to buy and it would be depreciated straight-line to zero over five years. The machine will have zero salvage value in five years. Mikata can lease the equipment for five years, with the lease payment due at the beginning of each year. The firm can borrow at a rate of 6%. Over what range of lease payments will the lease be profitable for both parties assuming Mikata has zero tax in the next few years, whereas the lessor pays tax at 15%? Min = $48,288; Max = $51,427 Min = $49,338; Max = $50,615 Min = $48,288; Max = $50,615 Min = $49,352; Max = $50,615 Min = $49352; Max = $51,208
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