Problem 21-12 Debt Capacity Montclair Manufacturing is considering leasing some equipment. The annual lease payment would be $705,000 per year for seven years. The appropriate interest rate is 6 percent and the company is in the 25 percent tax bracket. What reduction in debt capacity would occur if the company signs the lease? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Reduction in debt capacity $ 2,951,758.80
Problem 21-12 Debt Capacity Montclair Manufacturing is considering leasing some equipment. The annual lease payment would be $705,000 per year for seven years. The appropriate interest rate is 6 percent and the company is in the 25 percent tax bracket. What reduction in debt capacity would occur if the company signs the lease? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Reduction in debt capacity $ 2,951,758.80
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Problem 21-12 Debt Capacity
Montclair Manufacturing is considering leasing some equipment. The annual lease
payment would be $705,000 per year for seven years. The appropriate interest rate is 6
percent and the company is in the 25 percent tax bracket. What reduction in debt
capacity would occur if the company signs the lease? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer is complete but not entirely correct.
Reduction in debt
capacity
$
2,951,758.80
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