Problem:
Given the lease payments and terms shown in the following table, determine the yearly after-tax cash outflows for each firm.
Required:
Assume that lease payments are made at the beginning of each year, that the firm is in the 40% tax bracket, and that no purchase option exists.
Note: Please show how you came up with the solution.
|
Firm
|
Annual Lease Payment
|
Term of Lease (Years)
|
|
A
|
$250,000
|
5
|
|
B
|
$160,000
|
12
|
|
C
|
$500,000
|
8
|
|
D
|
$1,000,000
|
20
|
|
E
|
$25,000
|
6
|