Sigma Tools Will Lease a Computerized Stamping Machine from StarBanc

question 48

Multiple Choice

Sigma Tools will lease a computerized stamping machine from StarBanc.The machine costs $500,000 and will be depreciated on a straight-line basis to a zero book value over the next 5 years, which is also the term of the lease.The expected salvage value in 5 years is $25,000.StarBanc's marginal tax rate is 30 percent and it requires an after- tax rate of return of 12 percent on investments of this type.What annual, beginning of the year, pretax lease payment must StarBanc receive to earn the required 12 percent return?

• A)$135,133
• B)$93,540
• C)$94,593
• D)$100,000

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