Bird Wing Bedding can lease an asset for four years with payments of $26,000 due at the beginning of the year. The firm can borrow at a 9% rate and pays a 25% federal-plus-state tax rate. The lease qualifies as a tax-oriented lease. What is the cost of leasing? Do not round intermediate calculations. Round your answer to the nearest dollar.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
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Bird Wing Bedding can lease an asset for four years
with payments of $26,000 due at the beginning of
the year. The firm can borrow at a 9% rate and pays
a 25% federal-plus-state tax rate. The lease qualifies
as a tax-oriented lease. What is the cost of leasing?
Do not round intermediate calculations. Round your
answer to the nearest dollar.
Transcribed Image Text:Bird Wing Bedding can lease an asset for four years with payments of $26,000 due at the beginning of the year. The firm can borrow at a 9% rate and pays a 25% federal-plus-state tax rate. The lease qualifies as a tax-oriented lease. What is the cost of leasing? Do not round intermediate calculations. Round your answer to the nearest dollar.
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