Business, 18.06.2021 03:50 AM28

Aaron Co. needs a machine for a 5-year project. It can either (1) buy a machine without borrowing for $500,000 or (2) enter into a 5-year operating lease for an annual payment of $105,000. The machine has an estimated useful life of 5 years, after which it can be sold for $15,000. The average tax rate is 30%, and the discount rate for the project is 6%. Relevant discount factors are below: Present value of 1 at 6% in 1 year: 0.943 Present value of 1 at 6% in 2 years: 0.890 Present value of 1 at 6% in 3 years: 0.840 Present value of 1 at 6% in 4 years: 0.792 Present value of 1 at 6% in 5 years: 0.747 What is the present value of the relevant net cash outflows of the operating lease

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Aaron Co. needs a machine for a 5-year project. It can either (1) buy a machine without borrowing fo...