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The results of a sale - leaseback analysis indicate that the internal rate of return of the after - tax differential cash flows between the

The results of a sale-leaseback analysis indicate that the internal rate of return of the after-tax differential cash flows between the hold-and-do-nothing option and the sale-leaseback option is 6.23 percent. The owner could continue to own the property for ten more years and refinance it based on the following assumptions: a loan-to-value of 75 percent of the market value of $5,000,000, an interest rate of 7 percent, an amortization period of 25 years, a ten-year term, 12 payments per year, a loan cost of 2.5 percent of the loan amount, and a corporate tax rate of 21 percent.Which is the better alternative for the user as far as the after-tax cost of funds is concerned?

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