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Witten Entertainment is considering buying a machine that costs $550,000. The machine will be depreciated over...

Witten Entertainment is considering buying a machine that costs $550,000. The machine will be depreciated over five years by the straight-line method and will be worthless at that time. The company can lease the machine with year-end payments of $145,000. The company can issue bonds at an interest rate of 7 percent. The corporate tax rate is 25 percent. What is the NAL of the lease?

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Depreciation Tax sheild = Depreciations tax rate Depreciation = 550000 x 0.25 Aptu tay = $300 a $27500 lease Payment - PaymenNAU = Cost - Cash flow (PUIPA 5.25%, 5) a SSoooo 136250 (PVIFA 5.254.15) S S0000 - 5858 36.77 30-$35836. 77 is Negaliu compan

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