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Financial Management 3
Financial Management 3
Financial Management 3
and the first two payments on December 31, 2017, and January 31, 2018, assuming the payment is a fixed principal payment o
t is a fixed principal payment of $2,583
our firm is considering leasing a magic box. The lease lasts for three years.
The lease calls for three payments of $1,350 per year with the first payment occurring at lease inception.
The magic box would cost $3,600 to buy and would be straight-line depreciated to zero salvage value over three years.
The firm can borrow at 6 percent, and the marginal corporate tax rate is 21 percent. What is the NPV of the lease?
Cost of asset
0.943396
0.889996
0.839619
3600 2.673012
1346.795