The lease term is four years, while the economic life of the asset is five years.The annual lease payment is $10,000 at the beginning of each year, and the appropriate discount rate is 7.0%.There is no salvage value at the end of the lease.The lessee uses the straight-line depreciation method for both accounting and tax purposes.
a)Estimate the fair market value of the asset.
b)Estimate the change in NI, CFO, and CFF at the end of the first year if a firm decides to enter into the lease agreement.

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The Answer of The lease term is four years, while the economic life of the asset is five years.The annual lease payment is $10,000 at the beginning of each year, and the appropriate discount rate is 7.0%.There is no salvage value at the end of the lease.The lessee uses the straight-line depreciation method for both accounting and tax purposes.
a)Estimate the fair market value of the asset.
b)Estimate the change in NI, CFO, and CFF at the end of the first year if a firm decides to enter into the lease agreement.

The Lease Term Is Four Years, While the Economic Life