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Acme Limo has a client who will sign a lease for a limousine. Consider a $100,000 limousine that will last for four years and can be depreciated on a three-year MACRS schedule. Assume that lease rates for old and new limousine are the same and that Acme Limo Incs pretax administrative costs are $10,000 per limousine per year (these costs will occur at the beginning of the year). The cost of capital is 9% and the tax rate is 21%. The limousine is expected to be sold for $15,000 at the end of 4 years. The Lease payments are made in advance, that is, at the start of each year. The inflation rate is zero. What is the break-even operating lease rate for the limousine?

Use the following table for depreciation-MACRS Rates for three year asset--Half-Year Convention

Year	%
1	33.33%
2	44.45%
3	14.81%
4	7.41%

Please choose all correct answers. However if you choose a wrong answer, then each incorrect answer will reduce the score by 10%.

	1.	The cash flow for year 4 is $13420 to 13440
	2.	The break even leasing payment before tax is $36480 to $36520
	3.	The break even leasing payment after tax $28810 to $28830
	4.	The cash flow at year 2 is $1430 to 1438
	5.	The break even leasing payment before tax is $36450 to $36480
	6.	The break even leasing payment after tax $28790 to $28810
	7.	The cash flow for year 4 is $13400 to 13420
	8.	The break even leasing payment before tax is $36520 to $36550
	9.	The break even leasing payment after tax $28830 to $28850
	10.	The cash flow at year 0 is -$107,900
	11.	The cash flow at year 2 is $1438 to 1446
	12.	The cash flow at year 0 is -$110,000

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