Question
St. Martin's Hospital plans to purchase or lease a $2 million CT scanner. If purchased, the CT scanner will be depreciated on a straight-line basis
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St. Martin's Hospital plans to purchase or lease a $2 million CT scanner. If purchased, the CT scanner will be depreciated on a straight-line basis over five years, after which it will be worthless. If leased, the annual lease payments will be $500,000 per year for five years. St. Martin's borrowing cost is 8%, and its tax rate is 21%.
The amount of the lease-equivalent loan is closest to:
1,650,000
1,850,000
1,700,000
1,750,000
1,800,000
1,900,000
St. Martin's Hospital plans to purchase or lease a $2 million CT scanner. If purchased, the CT scanner will be depreciated on a straight-line basis over five years, after which it will be worthless. If leased, the annual lease payments will be $500,000 per year for five years. St. Martin's borrowing cost is 8%, and its tax rate is 21%.
The amount of the lease-equivalent loan is closest to:
| 1,650,000 | ||
| 1,850,000 | ||
| 1,700,000 | ||
| 1,750,000 | ||
| 1,800,000 | ||
| 1,900,000 |
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Public School Finance Decoded
Authors: Jay C. Toland
1st Edition
1475827679, 978-1475827675
