### Calculate the annual lease payments

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##### Reference no: EM13116000

Leases R Us, Inc. has been contracted by Robotics of Beverly Hills to provide a machine that would assist in automating a large part of their current assembly line. Annual lease payments will start at the begining of each year. The purchase price of this machine is \$200,000 and it will be leased by RBH for 5 years. LRU will utilize straight line depreciation of \$40,000 per year with a zero book salvage value. However, salvage value is estimated to actually be \$35,000 at the end of 5 years. LRU is required to earn a 14%, after-tax rate of return on the lease. LRU uses a marginal tax rate of 40%.

Calculate the annual lease payments. (Remember, these payments are to be considered at the begining of each year - annuity due.

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