(c) In which rental payment would the tenant be indifferent between ownership and leasing? Walton Nursing Home (WNH) is evaluating a policy lease for laundry equipment that costs $250,000 and falls into the three-year MACRS class. The house can take out an 8% loan on a four-year loan if WHN has decided to borrow and buy instead of renting. The laundry equipment has an economical life of four years and its estimated residual value at the end of Year 4 is $50,000. If WHN buys the equipment, it would purchase a maintenance contract that costs $5,000 per year and is payable at the beginning of each year. The terms of the lease, which include maintenance, include a lease payment of $71,000 at the beginning of each year. WNH`s tax rate is 40%. b) Suppose the owner is in the 40% tax bracket.
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