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Winterborne Enterprises requires the use of a private jet to enable its executives to visit its operations around the world. The company has identified the
Winterborne Enterprises requires the use of a private jet to enable its executives to visit its operations around the world. The company has identified the Gulfstream ER as the ideal aircraft for its requirements. It can buy a new Gulfstream ER for $ million, or it can lease the same aircraft for years. The Gulfstream ER can be depreciated for tax purposes over years, and its resale value at the end of that period is expected to be around $ million. If Winterborne buys the aircraft, it will have to pay $ million in annual maintenance costs, $ in annual flight crew wages, and $ in annual insurance costs. However, under the terms of the lease, the maintenance costs, flight crew wages, and insurance costs will be covered by the lessor. Such a lease is known as a "wet lease," in the private jet financing industry. Winterborne's cost of debt is pa and its tax rate is What is the breakeven lease payment, assuming that lease payments are made annually in advance and there is no option to purchase the aircraft when the lease terminates? Enter your answer as a number rounded to the nearest unit. So if the lease payment is $ you should enter as your answer.
Winterborne Enterprises requires the use of a private jet to enable its executives to visit its operations around the world. The company has identified the Gulfstream ER as the ideal aircraft for its requirements. It can buy a new Gulfstream ER for $ million, or it can lease the same aircraft for years. The Gulfstream ER can be depreciated for tax purposes over years, and its resale value at the end of that period is expected to be around $ million. If Winterborne buys the aircraft, it will have to pay $ million in annual maintenance costs, $ in annual flight crew wages, and $ in annual insurance costs. However, under the terms of the lease, the maintenance costs, flight crew wages, and insurance costs will be covered by the lessor. Such a lease is known as a "wet lease," in the private jet financing industry. Winterborne's cost of debt is pa and its tax rate is What is the breakeven lease payment, assuming that lease payments are made annually in advance and there is no option to purchase the aircraft when the lease terminates? Enter your answer as a number rounded to the nearest unit. So if the lease payment is $ you should enter as your answer.
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