Question:
For the next two years, a lease is estimated to have an operating net cash inflow of $7,500 per annum, before adjusting for $5,000 per annum tax basis lease amortization, and a 40% tax rate. The present value of an ordinary annuity of $1 per year at 10% for two years is 1.74. What is the lease's after-tax present value using a 10% discount factor?
1. $ 2,610
2. $ 4,350
3. $ 9,570
4. $11,310