Calculate the present value of the after tax cash flows

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Question - Hittel, Inc. is considering leasing or purchasing a small aircraft to transport executives between manufacturing facilities and the main administrative headquarters. The firm is in the 40 percent tax bracket and its after tax cost of debt is seven percent. The estimated after tax cash flows for the lease and purchase alternatives are given below:

End of Year	Cash Flows (after tax)	Lease Purchase
1	64,329	68,454
2	64,329	59,110
3	64,329	63,596
4	64,329	66,633
5	-64,329	-30,056

Given the above cash outflows for each alternative, calculate the present value of the after tax cash flows using the after tax cost of debt for each alternative.

Reference no: EM132148895

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