Ajax Company is considering a three year financial lease.A cash flow schedule was developed that reflects the cost of the machine, CCA tax shields and after tax lease payments.The company has a 10% rate requirement and a 30% tax rate.
$$\begin{array} { | l | c | c | c | c | }
\hline \text { Year } & 0 & 1 & 2 & 3 \
\hline \text { Lease Cash Flows } & + 62,000 & - 26,800 & - 22,200 & - 17,600 \
\hline
\end{array}$$ What is the value of the lease?

Question

Ajax Company is considering a three year financial lease.A cash flow schedule was developed that reflects the cost of the machine, CCA tax shields and after tax lease payments.The company has a 10% rate requirement and a 30% tax rate.
 $$\begin{array} { | l | c | c | c | c | } 
\hline \text { Year } & 0 & 1 & 2 & 3 \
\hline \text { Lease Cash Flows } & + 62,000 & - 26,800 & - 22,200 & - 17,600 \
\hline
\end{array}$$ What is the value of the lease?

Quizplus · Accepted Answer

The Answer of Ajax Company is considering a three year financial lease.A cash flow schedule was developed that reflects the cost of the machine, CCA tax shields and after tax lease payments.The company has a 10% rate requirement and a 30% tax rate.
 $$\begin{array} { | l | c | c | c | c | } 
\hline \text { Year } & 0 & 1 & 2 & 3 \
\hline \text { Lease Cash Flows } & + 62,000 & - 26,800 & - 22,200 & - 17,600 \
\hline
\end{array}$$ What is the value of the lease?

Ajax Company Is Considering a Three Year Financial Lease What Is the Value of the Lease