Range of lease payments

Assignment Help Finance Basics
Reference no: EM131706582

An asset costs $720,000 and will be depreciated in a straight-line manner over its three-year life. It will have no salvage value. The lessor can borrow at 5.4 percent and the lessee can borrow at 8.4 percent. The corporate tax rate is 34 percent for both companies.  

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$

Reference no: EM131706582

Questions Cloud

Payment were made in advance : If a machine costs $50,000 and $5,000 a year for the lessor to maintain and insure, what equivalent annual cost would serve as the basis of a full-service
What perks do you see in the new belgium bre-wery : What perks do you see in the New Belgium Bre-wery that could be an added plus to your work environment? Identify at least two of those perks.
Formula for a future value of an annuity : The effective rate is (1+.05/4)4 - 1 = 0.0509. This rate is plugged into the formula for a future value of an annuity due as the i or rate per period:
Explain the formation of a nerve impulse : Explain the formation of a nerve impulse in relation to a class of cell surface receptors. What are the names of the receptors
Range of lease payments : 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?
Journalize the entries for the completion of the two jobs : On March 31, Job 10 is sold to the customer for $52,380 in cash. Journalize the entries for the completion of the two jobs and the sale of Job 10
How are chromosomes distributed within the nucleus : How are chromosomes distributed within the nucleus? How many Nuclear Pores are there per nucleus? How is that of any relevance
Why do organizations have budgets : 1. Why do organizations have budgets? 2. Why did Borealis decide to abandon budgets?
Which conditions is the demographic segmentation bases : Assuming that a strong CRM system is in place in each brand's parent firm, what specific actions can marketing managers take in each case to ensure.

Reviews

Write a Review

Finance Basics Questions & Answers

  Should national foods produce the new candy

National Foods is considering producing a new candy, Nasty-As-Can-Be. National has spent two years and $450,000 developing this product.

  What is the discontinued operation

Match (by letter) the following items with the description or example that best fits. Each letter is used only once.

  Borrow or deposit at the riskfree rate

How much cash you need to borrow or deposit at the riskfree rate.

  Net present value of the refunding

Today15 year five percnt seminannual payment bonds can be sold at par but foltation costs on this issue would be two percent. what is the net present value of the refunding?

  What is the difference between a centralized and

what is the difference between a centralized and decentralized debt denomination for an

  Calculation of cost of equity with debt to equity ratio

Your firm has a debt-equity ratio of 0.75. Your pre-tax cost of debt is 8.5% and your required return on assets is 15%. What is your cost of equity if you ignore taxes?

  What factors will the venture capital organization andor

you have just invented a new product that you believe will make you a millionaire in canada.nbsp however you do not

  Describe the marginal costs and benefits associated

Describe the marginal costs and benefits associated with each of the following changes in a firm's credit and collection policies: a. Increasing the credit period from 7 to 30 days b. Increasing the cash discount from 1 to 2 percent

  Exchange rates fluctuate under both the fixed exchange rate

under the fixed exchange rate system what was the currency against which all other currency values were defined?

  How much will the borrower owe when the balloon payment

Consider a 5-year balloon loan for $100,000. The bank requires a monthly payment equal to that of a 30-year fixed-rate loan with a nominal annual rate of 5.5%. How much will the borrower owe when the balloon payment is due?

  Calculate the duration of a commercial loan

Calculate the duration of a commercial loan. The face value of the loan is $2,000,000. It requires simple interest yearly, with an APR of 8%. The loan is due in four years. The current market rate for such loans is 8%.

  The site front page, access ibm research

From the site's front page, access "IBM Research" (it changes from year to year, but it is in the "About IBM" at the bottom of the page - click to section "IBM Research"). Choose one project from the list and describe in a paragraph or two what..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd