Buildtrock Builders need a crane costing Rs.10 lakhs subject to depreciation on straight line method and has a life of 5 years. The lease rent is Rs.2.2 lakhs per annum to be paid in advance each year for 5 years. If the company can raise debt at 14% per annum payable at the beginning of the year should the company buy or lease the crane.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 9P
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Buildtrock Builders need a crane costing Rs.10 lakhs
subject to depreciation on straight line method and
has a life of 5 years. The lease rent is Rs.2.2 lakhs per
annum to be paid in advance each year for 5 years.
If the company can raise debt at 14% per annum
payable at the beginning of the year should the
company buy or lease the crane.
Transcribed Image Text:Buildtrock Builders need a crane costing Rs.10 lakhs subject to depreciation on straight line method and has a life of 5 years. The lease rent is Rs.2.2 lakhs per annum to be paid in advance each year for 5 years. If the company can raise debt at 14% per annum payable at the beginning of the year should the company buy or lease the crane.
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