What is maximum before-tax payment-firm is willing to make

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Reference no: EM13835174

Your firm wants to lease a $500,000 piece of equipment. The equipment has a 5-year life and a salvage value of $100,000 at the end of year 5.Depreciation is straight-line over 5 years to a zero book value. There will be 5 pre-paid lease payments on the equipment. Purchasing the asset has a positive NPV for your firm. Assume the tax rate is 35%.The before-tax cost of debt is 8%.What is the maximum before-tax payment your firm is willing to make?

Reference no: EM13835174

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