Kaleidescope Entertainment is considering buying a machine that costs $551,000. The machine will be depreciated over five years by the straight-line method and will be worthless at that time. The company can lease the machine with year-end payments of $146,000. The company can issue bonds at an interest rate of 8 percent. The corporate tax rate is 21 percent. What is the NAL of the lease? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Kaleidescope Entertainment is considering buying a machine that costs $551,000. The machine will be depreciated over five years by the straight-line method and will be worthless at that time. The company can lease the machine with year-end payments of $146,000. The company can issue bonds at an interest rate of 8 percent. The corporate tax rate is 21 percent. What is the NAL of the lease? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Kaleidescope Entertainment is considering buying a machine that costs $551,000. The
machine will be depreciated over five years by the straight-line method and will be
worthless at that time. The company can lease the machine with year-end payments of
$146,000. The company can issue bonds at an interest rate of 8 percent. The corporate
tax rate is 21 percent. What is the NAL of the lease? (A negative answer should be
indicated by a minus sign. Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)
NAL
Answer is complete but not entirely correct.
$
27,293.29 x
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