Register
if the company chooses the lease option, it will have to pay an immediate deposit of 25000 to cover any future damages to the equipment. deposit is refundable at the end of the lease term. the annual lease
128k views
5 votes
if the company chooses the lease option, it will have to pay an immediate deposit of 25000 to cover any future damages to the equipment. deposit is refundable at the end of the lease term. the annual lease payments are made at the end of each year. based on a net present value analysis with a discount rate of 20% what is the financial advantage (disadvantage) of buying the equipment rather than leasing it

User Ersan
by
5.6k points

1 Answer

3 votes

Answer:

The answer is "68,788".

Step-by-step explanation:

Net cash flow present value = immediate deposit + Annual lease payment present value


= 25000+(18000* 2.991)-25000* 0.402

Net cash flow present value
= 78838-10050 = 68788

User Hamida
by
4.7k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

5.2m questions

6.8m answers

Other Questions

Decker Tires' free cash flow was just FCF0 = $1.32. Analysts expect the company's free cash flow to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The WACC
Misk Co. purchased the following securities during 20X7 to be classified as held-to-maturity securities, trading securities, or available-for-sale securities: I. Debt securities bought and held for the
Risa has to work long hours and sometimes weekends, losing out on family time. Risa doesn't find her long hours overly stressful, but rather she sees it as her contribution to maintaining her family's
Which of the following should be considered last when searching for financing? Family members Banks Commercial finance companies Credit cards I'm guessing it's C but idk
Explain the similarities and differences between how both producers and consumer use money
Link Copied!