The npv of the lease relative to purchase to lessor

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A machine that costs $280,000 would be depreciated using the straight-line method by a leasing firm over a period of 3 years. Both the book value and the market value would be zero at the end of the 3 years. The lessor has a 34 percent tax rate while the lessee’s tax rate is 20 percent. What is the NPV of the lease relative to the purchase to the lessor if the applicable pretax cost of borrowing is 7 percent and the lease payments are set at $102,100 annually for 3 years?

Reference no: EM131936035

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