An asset costs $760,000 and will be depreciated in a straight-line manner over its three-year life....

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An asset costs $760,000 and will be depreciated in astraight-line manner over its three-year life. It will have nosalvage value. The lessor can borrow at 5.9 percent and the lesseecan borrow at 8.4 percent. The corporate tax rate is 22 percent forboth companies. a. What would the lease payment have to be to makeboth the lessor and lessee indifferent about the lease? b. Assumethat the lessee pays no taxes and the lessor pays taxes. For whatrange of lease payments does the lease have a positive NPV for bothparties?

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An asset costs $760,000 and will be depreciated in astraight-line manner over its three-year life. It will have nosalvage value. The lessor can borrow at 5.9 percent and the lesseecan borrow at 8.4 percent. The corporate tax rate is 22 percent forboth companies. a. What would the lease payment have to be to makeboth the lessor and lessee indifferent about the lease? b. Assumethat the lessee pays no taxes and the lessor pays taxes. For whatrange of lease payments does the lease have a positive NPV for bothparties?