Witten Entertainment is considering buying a machine that costs $562,000. The machine will be depreciated over four years by the straight-line method and will be worthless at that time. The company can lease the machine with year-end payments of $175,000. The company can issue bonds at an interest rate of 7 percent. The corporate tax rate is 22 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
Witten Entertainment is considering buying a machine that costs $562,000. The machine will be depreciated over four years by the straight-line method and will be worthless at that time. The company can lease the machine with year-end payments of $175,000. The company can issue bonds at an interest rate of 7 percent. The corporate tax rate is 22 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
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
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Transcribed Image Text:Witten Entertainment is considering buying a machine that costs $562,000. The machine
will be depreciated over four years by the straight-line method and will be worthless at
that time. The company can lease the machine with year-end payments of $175,000. The
company can issue bonds at an interest rate of 7 percent. The corporate tax rate is 22
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
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