Bird Wing Bedding can lease an asset for 4 years with payments of $15,000 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? Do not round intermediate calculations. Round your answer to the nearest dollar.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter19: Lease And Intermediate-term Financing
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Cost of Tax-Oriented Lease
Bird Wing Bedding can lease an asset for 4 years with payments of $15,000 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? Do not round intermediate calculations. Round your answer to
the nearest dollar.
Transcribed Image Text:Cost of Tax-Oriented Lease Bird Wing Bedding can lease an asset for 4 years with payments of $15,000 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? Do not round intermediate calculations. Round your answer to the nearest dollar.
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