Please correct answer and don't used hand raiting Bird Wing Bedding can lease an asset for 4 years with payments of $25,000 due at the beginning of the year. The firm can borrow at a 10% rate and pays a 25% federal-plus-state tax rate. The lease qualifies as a tax-oriented lease. What is the cost of leasing? Donot round intermediate calculations. Round your answer to the nearest dollar.

Given:Annual lease payment (L) = $25,000Borrowing rate (r) = 10% or 0.10Tax rate (T) = 25% or…

Answered: Bird Wing Bedding can lease an asset…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 1P

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Bird Wing Bedding can lease an asset for 4 years with payments of $22,000 due at the beginning of the year. The firm can borrow at a 6% rate and pays a 25% federal-plus-state tax rate. The lease qualifies as a tax-oriented lease. What is the cost of leasing?
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Domebo Corporation has entered into a 8 year lease for a piece of equipment. The annual payment under the lease will be $3,200, with payments being made at the beginning of each year. If the discount rate is 14%, the present value of the lease payments is closest to (Ignore income taxes.): view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided.Round your intermediate calculations to 3 decimal places.
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