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Your firm is considering leasing a new robotic milling control system. The lease last for 5 years. The lease calls for 6 payments of $300,000 per year with the first payment occurring at lease inception. The system would cost $1,050,000 to buy and would be straight-line depreciated to a zero salvage value. The firm can borrow at 8%, and the corporate tax rate is 34%.

(a) What is the NPV of the lease?

(b) What is the maximum lease payment that you would be willing to make?

"Please show simplified working for question b and c thanks. That is giving me problems to conceptualize".

THE LEASE IS 5 YEARS

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92406486

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