Multiple Choice
Thornby Consolidated wants to lease new office furniture from West Coast Leasing. The cost of thefurniture is $100 000 and it has an expected life of 6 years, which is also the term of the financiallease. West Coast's cost of capital is 5% and its tax rate is 45%. The combined Present Value of the tax shield from CCA, the salvage and the tax shield lost due to salvage is $39 919. What is the minimum annual lease payment West Coast Leasing can set and earn its required rate of return?
A) $16 544
B) $19 728
C) $22 044
D) $21 859
Correct Answer:
Verified
Correct Answer:
Verified
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