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A firm, which has zero tax rate due to tax loss ca...

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A firm, which has zero tax rate due to tax loss carry-forwards, is considering a 5-year, $6,000,000 bank loan to finance equipment. The loan has an interest rate of 10%, payable monthly, and would be amortized over 5 years, with 5 end-of-year principal payments. It can also lease the equipment for 5 end-of-year payments of $1,690,000 each. How much larger are the year-one bank payments (principal plus interest) than the year-one lease payment?

 

Paper#8705 | Written in 18-Jul-2015

Price : $25
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