A company needs to decide whether to lease or buy new equipment. The equipment can be purchased for $810,000. If leased, the company will need
A company needs to decide whether to lease or buy new equipment. The equipment can be purchased for $810,000. If leased, the company will need to pay annual maintenance costs. Assume the following: PVCCATS = $140,000; Present Value of Salvage Value = $170,000; Present Value of Lease Payments Before-tax= $910,000; Present Value of Lease Payments Tax Shield = $275,000; Present Value of Annual Maintenance Costs After-tax = $11,000. If you were calculating the NAL for the company, what amount would you use in your NAL calculation for the present value of leasing?
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Authors: Hal Scott, Anna Gelpern
21st Edition
1634602048, 978-1634602044
