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    Present value of lease payments

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    If I commit to 6 annual lease payment of $100,000.00 and the first payment due immediately What is the present value of the lease is the borrowing rate is 9% and it tax rate is 35%? The lease payments are tax deductible.

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    After tax amount is 100,000 X (1-0.35) = $65,000. The payments are an annuity and since they are made at the beginning of the period, it is annuity due. We are ...

    Solution Summary

    The solution explains how to calculate the present value of lease payments.