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How much should the lease payments be

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Reference no: EM132777205

Question - The Hegan Corporation plans to lease a $760,000 asset to the Doby Corporation. The lease will be for 15 years. Lease payments, payable at the beginning of the year.

Required -

a. If the Hegan Corporation desires a 12 percent return on its investment, how much should the lease payments be?

b. If the Hegan Corporation is able to generate $115,000 in immediate tax shield benefits from the asset to be purchased for the lease arrangement and will pass the benefits along to the Doby Corporation in the form of lower lease payments, how much should the revised lease payments be? Continue to assume the Hegan Corporation desires a 12 percent return on the 15-year lease.

Reference no: EM132777205

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