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Ajax Capital has determined that the amount to be amortized on an extruder is $540,000. What annual lease payment must Ajax (lessor) require from the lessee if the required rate of return is 16%? Assume that the lease payments will be made at the beginning of each of the 7 years of the lease agreement and that the marginal tax rate is 40%.

Respuesta :

TomShelby

Answer:

the lease payment will be for 130,538.92 dollars

Explanation:

as we want a net return of 16%

we will charge 40% to the interest rate to know the nominal interest:

0.16 x 1.4 = 0.224 = 22.4% before-tax rate

Now, we solve for the lease payment of this annuity-due:

[tex]PV \div \frac{1-(1+r)^{-time} }{rate} (1+r)= C\\[/tex]  

PV  $540,000.00  

time 7

rate 0.224

[tex]540000 \div \frac{1-(1+0.224)^{-7} }{0.224}(1+0.40) = C\\[/tex]  

C  $ 130,538.923  

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