Question
Your company needs a new corporate jet for 5 years. You can either buy or lease it. If you lease it, you need to make
Your company needs a new corporate jet for 5 years. You can either buy or lease it. If you lease it, you need to make a lease payment at the beginning of each year. All prices are in $ million.
A | B | |
1 | Price of jet | 16 |
2 | Resale value after 5 years | 8 |
3 | Annual lease payment | 1.6 |
4 | Number of lease payments | 5 |
5 | Interest rate | 12% |
Part 1
What is the net advantage to leasing, i.e., the incremental NPV of leasing relative to buying (in $ million)?
Step by Step Solution
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Step: 1
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College Algebra
Authors: Robert F Blitzer
7th Edition
013449492X, 9780134453262
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