Suppose that National Waferonics has before it a proposal for a four-year financial lease.     Year 0 Year 1 Year 2 Year 3 Lease cash flow +59,200 −27,900 −23,300 −18,700     These flows reflect the cost of the machine, depreciation tax shields, and the after-tax lease payments. Ignore salvage value. Assume the firm could borrow at 14% and faces a 21% marginal tax rate.   a. What is the value of the equivalent loan? b. What is the value of the lease?

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.