Problem:
Learning University is tax-exempt. They need a new mini-bus for the campus. They can either buy or lease the bus. A new bus costs $123,000. It has a 6-year life with no salvage value. Depreciation is straight-line over 6 years. The interest rate (before taxes) is 8%. If they lease, there will be 6 prepaid lease payments.
Required:
Question: What is the maximum lease payment that LU will accept?
Note: Please explain comprehensively and give step by step solution.