Answer Happy

If a firm can buy a machine for $80000, takes an investment tax credit of 15%, and lease out the machine for 9 years with lease payments at the beginning of the year, how much should the minimum annual lease payments be? Assume a 5-year straight-line depreciation, $26400 salvage and a tax rate of 35%. Assume further that it can borrow at a before tax rate of 7% and the after-tax required rate of return is 5.85%? $8,100 $7,300 $8,800 $7,700 $8,000