Question
A company needs to decide whether to buy or lease new equipment. The company can buy the equipment for $1,800,000. If leased, the company will
A company needs to decide whether to buy or lease new equipment. The company can buy the equipment for $1,800,000. If leased, the company will be required to pay maintenance costs annually. Consider the following: Present Value of Lease Payments Before-tax = $1,100,000; Present Value of Lease Payments Tax Shield = $220,000; PVCCATS = $350,000; Present Value of Salvage Value = $400,000; Present Value of Annual Maintenance Costs After-tax = $3,000. Assume you were computing the NAL for the company. What amount would you use in your analysis for the present value of leasing?
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International financial management
Authors: Jeff Madura
9th Edition
978-0324593495, 324568207, 324568193, 032459349X, 9780324568202, 9780324568196, 978-0324593471
