Al-Tek Is Considering Leasing Some New Equipment for 5 Years

Al-Tek is considering leasing some new equipment for 5 years with annual payments.The equipment would cost $115,000 to buy and would be depreciated straightline to a zero salvage value.The actual salvage value is zero.The applicable pretax borrowing rate is 8 percent.The lessee does not expect to owe taxes for several years.The lessor's tax rate is 21 percent.What is the minimum lease payment that will be acceptable to both parties?

A) $28,603.33
B) $28,745.16
C) $27,750.00
D) $22,708.67
E) $26,709.12

Correct Answer:

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