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Starcourt Leasing has been approached by USSR Logistics company (USSR) to provide lease financing for a fleet of new semi-trailer trucks

Finance Mar 05, 2022

Starcourt Leasing has been approached by USSR Logistics company (USSR) to provide lease financing for a fleet of new semi-trailer trucks. Each truck will cost $200,000 and will be leased by USSR for 5 years with lease payments made at the beginning of each year. Startcourt will depreciate the trucks on a straight-line basis to $0 but the actual market value at the end of 5 years is estimated to be $50,000. What are the required annual beginning-of-year lease payments if Starcourt desires to earn a 15% after- tax rate of return? Assume a marginal tax rate of 25%.

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