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Greencore Corporation is considering leasing a new equipment. The lease lasts for 8 years. The lease...
Greencore Corporation is considering leasing a new equipment. The lease lasts for 8 years. The lease calls for 8 payments of $225,000 per year with the first payment occurring immediately. The equipment would cost $1,480,000 to buy and would be straight-line depreciated to a zero salvage value over 8 years. The firm can borrow at a rate of 6%. The corporate tax rate is 25%. The actual pre-tax salvage value is $36,000. What would the NPV of the lease relative to the purchase be?
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Please refer to below spreadsheet for calculation and answer. Cell reference also provided.
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jeff jeffy answered 2 years agoRelated Solutions
Greencore Corporation is considering leasing a new equipment. The lease lasts for 8 years. The lease...
Greencore Corporation is considering leasing a new equipment.
The lease lasts for 8 years. The lease calls for 8 payments of
$225,000 per year with the first payment occurring immediately. The
equipment would cost $1,480,000 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%.
The corporate tax rate is...
Greencore Corporation is considering leasing a new equipment. The lease lasts for 8 years. The lease...
Greencore Corporation is considering leasing a new equipment.
The lease lasts for 8 years. The lease calls for 8 payments of
$225,000 per year with the first payment occurring immediately. The
equipment would cost $1,480,000 to buy and would be straight-line
depreciated to a zero salvage value over 8 years. The firm can
borrow at a rate of 6%. The corporate tax rate is 25%. The actual
pre-tax salvage value is $36,000. What would the NPV of the lease
relative...
Greencore Corporation is considering leasing a new equipment. The lease lasts for 8 years. The lease...
Greencore Corporation is considering leasing a new equipment.
The lease lasts for 8 years. The lease calls for 8 payments of
$225,000 per year with the first payment occurring immediately. The
equipment would cost $1,480,000 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%.
The corporate tax rate is...
Greencore Corporation is considering leasing a new equipment. The lease lasts for 8 years. The lease...
Greencore Corporation is considering leasing a new equipment.
The lease lasts for 8 years. The lease calls for 8 payments of
$225,000 per year with the first payment occurring immediately. The
equipment would cost $1,480,000 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 after-tax cash...
Green Corporation is considering leasing a new equipment. The lease lasts for 8 years. The lease...
Green Corporation is considering leasing a new equipment. The lease
lasts for 8 years. The lease calls for 8 payments of $225,000 per
year with the first payment occurring immediately. The equipment
would cost $1,480,000 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%. The
corporate tax rate is...
Spectrum Corporation is considering leasing a new equipment. The lease lasts for 8 years. The lease...
Spectrum Corporation is considering leasing a new equipment. The
lease lasts for 8 years. The lease calls for 8 payments of $142,000
per year with the first payment occurring immediately. The
equipment would cost $1,020,000 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%.
The corporate tax rate is...
Spectrum Corporation is considering leasing a new equipment. The lease lasts for 8 years. The lease...
Spectrum Corporation is considering leasing a new equipment. The
lease lasts for 8 years. The lease calls for 8 payments of $142,000
per year with the first payment occurring immediately. The
equipment would cost $1,020,000 to buy and would be straight-line
depreciated to a zero salvage value over 8 years. The firm can
borrow at a rate of 6%. The corporate tax rate is 25%. The actual
pre-tax salvage value is $27,000. What would the NPV of the lease
relative...
Spectrum Corporation is considering leasing a new equipment. The lease lasts for 8 years. The lease...
Spectrum Corporation is considering leasing a new equipment. The
lease lasts for 8 years. The lease calls for 8 payments of $142,000
per year with the first payment occurring immediately. The
equipment would cost $1,020,000 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 after-tax cash...
Marshall Corporation is considering leasing a new equipment. The lease lasts for 8 years. The lease...
Marshall Corporation is considering leasing a new equipment. The
lease lasts for 8 years. The lease calls for 8 payments of $102,000
per year with the first payment occurring immediately. The
equipment would cost $680,000 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 7.2%. The corporate tax rate is
25%. What is the after-tax cash...
Marshall Corporation is considering leasing a new equipment. The lease lasts for 8 years. The lease...
Marshall Corporation is considering leasing a new equipment. The
lease lasts for 8 years. The lease calls for 8 payments of $102,000
per year with the first payment occurring immediately. The
equipment would cost $680,000 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 actual pre-tax salvage value is $34,000. The firm can borrow at
a rate of 7.2%. The corporate tax rate...
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