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Your firm is considering leasing




Your firm is considering leasing a new robotic million control system. The lease lasts for 5;years. The lease calls for 6 payments of $300,000 per year with the first payment occurring at;lease inception. The black box would cost $1,050,000 to buy and would be straight-line;depreciated to a zero salvage. The actual salvage value is zero. The firm can borrow at 8%;and the corporate tax rate is 34%.;1. What is the appropriate discount rate for valuing the lease?;2. What is the maximum lease payment that you would be willing to make?;3. What is the NPV of the lease?;4. What is the after tax cash flow from leasing in year 0?;5. What is the minimum lease payment that the lessor would be wiling to accept?


Paper#31841 | Written in 18-Jul-2015

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