The npv of the lease relative to purchase to lessor

Assignment Help Financial Management

Reference no: EM131936035

A machine that costs $280,000 would be depreciated using the straight-line method by a leasing firm over a period of 3 years. Both the book value and the market value would be zero at the end of the 3 years. The lessor has a 34 percent tax rate while the lessee’s tax rate is 20 percent. What is the NPV of the lease relative to the purchase to the lessor if the applicable pretax cost of borrowing is 7 percent and the lease payments are set at $102,100 annually for 3 years?

Reference no: EM131936035

Questions Cloud

Find the covariance of returns : The standard deviation of return for A and B are 8.9% and 5.12%, respectively. Find the Covariance of returns between A and B.

What do economists mean by the acronym tanstaafl : How would this concept apply to the policy of giving everyone "free" college tuition? Use the concepts of efficiency and equity to support your explanation.

Create a new product that will serve two business markets : Write a 750-word paper that describes your product, explains your strategy for entering the markets, and analyzes the potential barriers you may encounter.

How congruent the design elements are with theme of movie : How congruent the design elements are with the theme of the movie. Whether or not other techniques would be as effective (Explain your reasoning).

The npv of the lease relative to purchase to lessor : What is the NPV of the lease relative to the purchase to the lessor if the applicable pretax cost of borrowing is 7 percent.

Residents of the michigan shoreline villages of empire : Residents of the Michigan shoreline villages of Empire, Glen Arbor and Leland were surprised as they awoke to see the Lake Michigan

Analyse and evaluate the economic impact of an event : Analyse and evaluate the economic impact of an event (or of a project) on a destination. The students' research must be based on published sources.

Estimate of the company cost of equity : If the stock sells for $39 per share, what is your best estimate of the company's cost of equity?

Careful coordination to avoid overdoing : Using the policies together to "fix" the economy makes sense, but would require careful coordination to avoid "overdoing" it.

User Account

All Pages