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Suppose that National Waferonics has before it a proposal for a four-year financial lease. The firm constructs a table. The bottom line of its table shows the lease cash flows:
These flows reflect the cost of the machine, depreciation tax shields, and the after-tax lease payments. Ignore salvage value. Assume the firm could borrow at 10% and faces a 35% marginal tax rate.
a. What is the value of the equivalent loan?
b. What is the value of the lease?
c. Suppose the machine's NPV under normal financing is - $5,000. Should National Waferonics invest? Should it sign thelease?

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