PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Textbook Question
Chapter 25, Problem 13PS
Valuing financial leases Look again at the bus lease described in Table 25.2.
- a. What is the value of the lease if Greymare’s marginal tax rate is Tc = .30?
- b. What would the lease value be if the tax rate is 21%, but for tax purposes, the initial investment had to be written off in equal amounts over years 1 through 5?
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Students have asked these similar questions
When is it appropriate for the lessee to use the lessor's implicit rate to calculate the present value of the lease payments?
A.when the lessee's incremental borrowing rate is lower than the lessor's rate
B.whenever the lessee knows what the lessor's rate is
C.when the lessor's implicit rate is lower than the lessee's incremental borrowing rate
D.when the lessor's rate is higher than the lessee's incremental borrowing rate
4. Calculate the net cash flow of lease, given lease payments of $10,500; lease payment tax
benefits of $4,150; and CCA tax shield of $2,200
42.. new recheck
A lessor with a sales-type lease involving an unguaranteed residual value at the end of the lease term will report sales revenue in the period of inception of the lease at which of the following amounts?
The sales price less the present value of the residual value.
The lease payments plus the unguaranteed residual value.
The present value of the lease payments plus the present value of the unguaranteed residual value.
The cost of the asset to the lessor, less the present value of any unguaranteed residual value.
Chapter 25 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 25 - Types of lease The following terms are often used...Ch. 25 - Reasons for leasing Some of the following reasons...Ch. 25 - Lease treatment in bankruptcy What happens if a...Ch. 25 - Lease treatment in bankruptcy How does the...Ch. 25 - Lease characteristics True or false? a. Lease...Ch. 25 - Operating leases Explain why the following...Ch. 25 - Inflation and operating leases In Problem 7, we...Ch. 25 - Technological change and operating leases Look at...Ch. 25 - Valuing financial leases Look again at Problem 7....Ch. 25 - Valuing Financial Leases Look again at the...
Ch. 25 - Valuing financial leases Look again at the bus...Ch. 25 - Valuing financial leases In Section 25-5, we...Ch. 25 - Valuing financial leases In Section 25-5, we...Ch. 25 - Valuing financial leases A lease with a varying...Ch. 25 - Valuing financial leases Nodhead College needs a...Ch. 25 - Valuing financial leases The Safety Razor Company...Ch. 25 - Nonrecourse debt Lenders to leveraged leases hold...Ch. 25 - Leveraged leases How would the lessee in Figure...Ch. 25 - Prob. 23PSCh. 25 - Valuing leases Suppose that the Greymare lease...
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