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What is the principal repayment for years one

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The PV of the cash outflows for leasing is $27,890. A firm could buy the asset for $30,000 by borrowing the funds at 10 percent for three years. Interest will be paid annually and the entire loan repaid at maturity. The firm's tax rate is 20 percent.

If the firm does buy, maintenance will be $1,000 in year one and increase by $1,000 each year. The estimated salvage value is $0, and depreciation will be $10,000 annually.

Problem 1: What is the principal repayment for YEARS 0, 1 , 2, 3?

Reference no: EM132764113

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