The lessor must calculate how much the lessee must pay in a way that guarantees the minimum expected profit. Assume that the landlord will require the tenant to pay in advance. Use the following data to determine: (1) Net Cost to the lessor; (2) After Tax Annual Payment; (3) Before Annual Tax Payment. Asset cost $10,000,000 Asset useful life 5 years Discount rate or cost of capital 8.75% Tax rate 35% straight-line depreciation Residual Value $0 Select one: a. (1) $10,000,000; (2) $1,553,973; (3) $2,390,728 b. (1) $7,259,490; (2) $3,218,398; (3) $2,091,959 c. (1) $10,000,000; (2) $2,000,000; (3) $3,076,923 d. (1) $7,259,490; (2) $1,798,083; (3) $2,766,282 e. (1) $7,259,490; (2) $2,013840; (3) $3,908,215

Q&A Education