Jet Dry Inc.is undergoing a sale/leaseback arrangement on a piece of its equipment.The equipment has a fair market value of $250,000,and currently generates $75,000 in annual revenue.The lease agreement is for five years,with no residual value at the end of the term.The annual leasing cost is $55,000.
The current UCC of the equipment is $150,000.Other assets will remain in the asset pool,and recapture will not occur as a result of the sale.
The company is subject to a corporate tax rate of 25%,and achieves a 12% after-tax rate of return.
Required:
Calculate the net present value of the cash flow that will result from this sale-and-leaseback arrangement.(Round all numbers to zero decimal points.)

Question

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The Answer of Jet Dry Inc.is undergoing a sale/leaseback arrangement on a piece of its equipment.The equipment has a fair market value of $250,000,and currently generates $75,000 in annual revenue.The lease agreement is for five years,with no residual value at the end of the term.The annual leasing cost is $55,000.
The current UCC of the equipment is $150,000.Other assets will remain in the asset pool,and recapture will not occur as a result of the sale.
The company is subject to a corporate tax rate of 25%,and achieves a 12% after-tax rate of return.
Required:
Calculate the net present value of the cash flow that will result from this sale-and-leaseback arrangement.(Round all numbers to zero decimal points.)