A lease has a term of 4 years and has annual payments of $3,400. The leased asset would cost $11,300 to buy and would be
A lease has a term of 4 years and has annual payments of $3,400. The leased asset would cost $11,300 to buy and would be depreciated straight-line to a zero salvage value over 4 years. The actual salvage value is of the asset is negligible. The lessee can borrow at a rate of 6%. What is the NPV of the lease relative to the purchase if the lessee's tax rate is 21%
A. $197
B. -$194
C. -$1,699
D. -$399
E. $23,107
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Authors: Judith J. Baker, R.W. Baker, Neil R. Dworkin
5th Edition
1284118215, 978-1284118216
