Question
5. With favorable growth prospect, Bien Company requires to add new machinery. The machine would cost $500,000 if purchased; It would be depreciated straight-line to
5. With favorable growth prospect, Bien Company requires to add new machinery. The machine would cost $500,000 if purchased; It would be depreciated straight-line to zero salvage over 5 years. Alternatively, it may be leased for $110,000/yr. The firm's borrowing cost of is 7%, and its tax rate is 40%
- List the leasing cash flows for year 0 and year 1 - 5.
- What is the net advantage to leasing (NAL)?
- What decision should be made regarding lease or buy?
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International Financial Reporting Standards An Introduction
Authors: Belverd E. Needles, Marian Powers
3rd Edition
1133187943, 978-1133187943
