Find the present value of the after-tax cash outflows

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JK Systems Inc. is building a new factory. The company is considering the acquisition of new plant and machinery costing $100,000. The machine is to be leased over a 6-year period at an annual lease payment of $19,200. JK Systems also plan to exercise their option to buy the machinery in year 6 at a cost of $15,000. The pre-tax cost of debt for the company is 8% and the applicable tax rate is 35%

Problem 1: Find the present value of the after-tax cash outflows for leasing this this equipment using the after-tax cost of debt.

Reference no: EM132972381

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