Problemyour firm is considering leasing a magic box the, Ask an Expert

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Problem:

Your firm is considering leasing a magic box. The lease lasts for three years. The lease calls for three payments of $1,350 per year with the first payment occurring at lease inception. The magic box would cost $3,600 to buy and would be straight-line depreciated to zero salvage value over three years. The firm can borrow at 6%, and the marginal corporate tax rate is 30%.

Required:

Question: What is the NPV of the lease?

Note: Show all workings.

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Category:- Basic Finance
Reference No.:- M91148050

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