Question
Please show work Carnival Company is considering leasing a new equipment. The lease lasts for 8 years. The lease calls for 8 payments of $9,000
Please show work
Carnival Company is considering leasing a new equipment. The lease lasts for 8 years. The lease calls for 8 payments of $9,000 per year with the first payment occurring immediately. The equipment would cost $60,000 to buy and would be straight-line depreciated to a zero salvage value over 8 years. The actual salvage value is negligible because of technological obsolescence. The firm can borrow at a rate of 6%. The corporate tax rate is 25%. What is the NPV of the lease relative to the purchase? $6,276.51 $4,729.61 -$3,519.26 -$2,537.00 -$1,556.47
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started