question archive An asset costs $720,000 and will be depreciated in a straight-line manner over its four-year life
An asset costs $720,000 and will be depreciated in a straight-line manner over its four-year life
Subject:FinancePrice: Bought3
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An asset costs $720,000 and will be depreciated in a straight-line manner over its four-year life. It will have no salvage value. The corporate tax rate is 40 percent, and the appropriate interest rate is 8 percent. |
| a. |
What would the lease payment have to be to make both the lessor and lessee indifferent about the lease? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| Lease payment | $ |
| b. |
Assume that the lessee pays no taxes and the lessor pays taxes. For what range of lease payments does the lease have a positive NPV for both parties? (Enter your answers from lowest to highest. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
| Lease payment range | $ to $ |
