ANB Leasing Is Planning to Lease an Asset Costing $210,000

question 21

Multiple Choice

ANB Leasing is planning to lease an asset costing $210,000.The lease period will be 6 years.At the end of 6 years, the salvage value is estimated to be $30,000.The asset will be depreciated on a straight-line basis of $30,000 per year over the 6-year period.ANB's marginal income tax rate is 40 percent, but its average tax rate is only 31.5%.If ANB Leasing requires a 12 percent after-tax rate of return on the lease, determine the required annual beginning of the year lease payments.

• A)$45,609
• B)$31,592
• C)$52,653
• D)$46,120