Nantec Company Is Considering a Three Year Financial Lease What Is the Value of the Lease

question 58

Essay

Nantec Company is considering a three year financial lease.A cash flow schedule was developed that reflects the cost of the machine, CCA tax shields and after tax lease payments.The company has a 12% return requirement and a 40% tax rate.
$$\begin{array} { | l | c | c | c | c | } \hline \text { Year } & 0 & 1 & 2 & 3 \\\hline \text { Lease Cash Flows } & + 80,000 & - 30,800 & - 30,000 & - 30,000 \\\hline\end{array}$$ What is the value of the lease?

Determine eligibility criteria for filing Form 1040EZ.

Calculate basic tax liability and understand the factors affecting it.

Understand the procedural aspects of tax law and administrative bodies involved.

Differentiate between types of tax authorities and their applicability.

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