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CHAPTER 26

Leasing

Answers to Practice Questions

8. The present value of the costs and the present value of the lease payments are shown in the following table:
| |t = 0 |t = 1 |t = 2 |t = 3 |t = 4 |t = 5 |t = 6 |
|Initial Cost |-3000.00 | | | | | | |
|Depreciation | | 600.00 | 960.00 | 576.00 | 345.60 | 345.60 | 172.80 |
|Depreciation tax shield | | 210.00 | 336.00 | 201.60 | 120.96 | 120.96 | 60.48 |
|After-tax admin. costs |-260.00 |-260.00 |-260.00 |-260.00 |-260.00 |-260.00 | |
|Total |-3260.00 | -50.00 | 76.00 | -58.40 |-139.04 |-139.04 | 60.48......

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