Leasing a radiographic x-ray machine

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For questions 1&3 If you can please provide the step by step process with the formula used to arrive at the answer. It is needed for my work to be accepted. I am Having a hard time being able to show how I arrived at the answers, step by step.

1. Your firm is considering leasing a radiographic x-ray machine. The lease lasts for three years. The lease calls for four payments of $25,000 per year with the first payment occurring immediately. The computer would cost $140,000 to buy and would be straight-line depreciated to a zero salvage value over three years. The actual salvage value is negligible. The firm can borrow at a rate of 12%. The corporate tax rate is 40%.

What is the after-tax cash flow from leasing relative to the after-tax cash flow from purchasing in year 0?

2. Discuss the stages of venture capital financing and define each in detail.

3. Your firm is considering leasing a new radiographic device. The lease lasts three years. The lease calls for four payments of $25,000 per year with the first payment occurring immediately. The computer would cost $140,000 to buy and would be straight line depreciated to a zero salvage value over three years. The actual salvage is negligible because of technological obsolesce . The firm can borrow at a rate of %12. The corporate tax rate is %40.

A. What is the NPV of the lease relative to the purchase?

B. What would the after-tax cash flow in year three be if the asset had a residual value of $1,000 (ignoring any possible risk differences)?

Reference no: EM131090097

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