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What is lessee npv of leasing

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Reference no: EM132611746

Lessee Inc. can either purchase a machine for $65,000 or lease it from Lessor for $9,100 per year (paid at the beginning of each year) for 8 years. The machine will have a salvage value of $5,850 at the end of year 8. The CCA rate is 40% and the machine is the only asset in the asset class for Lessee. Assume Lessee's cost of borrowing is 5% and its tax rate is 35%.

-What is Lessee's NPV of leasing?

-What is Lessee's maximum annual lease payment?

-Assume that Lessor has many other assets in the asset class with UCC of $9,009.24 at year 8, tax rate of 40% and cost of borrowing of 8%, find the minimum annual lease payment required by Lessor.

Reference no: EM132611746

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