An asset costs $640,000 and would be depreciated in a straight-line manner over its 4-year life. It will have no salvage value. The tax rate is 21 percent and the pretax cost of borrowing is 9 percent. What lease payment on this asset will make the lessee and the lessor equally well off?
A) $185,717
B) $194,141
C) $167,778
D) $197,235
E) $165,026

Question

Quizplus · Accepted Answer

The Answer of An asset costs $640,000 and would be depreciated in a straight-line manner over its 4-year life. It will have no salvage value. The tax rate is 21 percent and the pretax cost of borrowing is 9 percent. What lease payment on this asset will make the lessee and the lessor equally well off?
A) $185,717
B) $194,141
C) $167,778
D) $197,235
E) $165,026

An Asset Costs $640,000 and Would Be Depreciated in a Straight-Line