FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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| BigCo is considering leasing the new equipment that it requires, for $146000 a year, payable in advance. |
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The cost of the equipment is $775000, and will last for 5 years.
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The expected scrap value at the end of 5th year is $140000.
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Assume that the equipment will be fully
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The tax rate is 35%, the
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i. What is the net cost of buying?
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| ii. What is the net cost of leasing? |
| iii. What is the net advantage of leasing (NAL)? |
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iv. What is the maximum lease payment that would make BigCo indifferent between leasing or buying?
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