Required annual beginning of year lease payments

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Paragon Leasing has been approached by Mid-America Logistics Company (MALC) to provide lease financing for a fleet of new small aircrafts. Each aircraft will cost $300,000 and will be leased by MALC for 4 years with lease payments made at the beginning of each year. Paragon will depreciate the aircrafts on a straight-line basis to $0 but the actual market value at the end of 4 years is estimated to be $100,000. What are the required annual beginning-of-year lease payments if Paragon desires to earn a 20% after-tax rate of return? Assume a marginal tax rate of 35%.

Reference no: EM133373447

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