Calculation of net present value of lease alternative is shown below | ||||||||
Year | Lease payment | Discount factor @ 6.9% (1/(1.069^n) | Present value | |||||
1 | -$9,500 | 0.93545 | -$8,886.81 | |||||
2 | -$9,500 | 0.87507 | -$8,313.20 | |||||
3 | -$9,500 | 0.81859 | -$7,776.61 | |||||
4 | -$9,500 | 0.76575 | -$7,274.66 | |||||
5 | -$9,500 | 0.71633 | -$6,805.11 | |||||
Net present value | -$39,056 | |||||||
Calculation of net present value of maitaining equipment by self | ||||||||
Year | Cash flow | Discount factor @ 6.9% (1/(1.069^n) | Present value | |||||
0 | -$39,400 | 1.00000 | -$39,400.00 | |||||
1 | -$1,900 | 0.93545 | -$1,777.36 | |||||
2 | -$1,900 | 0.87507 | -$1,662.64 | |||||
3 | -$1,900 | 0.81859 | -$1,555.32 | |||||
4 | -$1,900 | 0.76575 | -$1,454.93 | |||||
5 | -$1,900 | 0.71633 | -$1,361.02 | |||||
Net present value | -$47,211 | |||||||
Company should opt for lease alternative as the cash outflow in terms of present value is lower than by purchasing and maintaining equipment. | ||||||||
Discount factor | ||||||||
0.93545 | 1/(1.069^1) | |||||||
0.87507 | 1/(1.069^2) | |||||||
0.81859 | 1/(1.069^3) | |||||||
0.76575 | 1/(1.069^4) | |||||||
0.71633 | 1/(1.069^5) | |||||||
You need a particular piece of equipment for your production process. An equipment-leasing company has offered...
You need a particular piece of equipment for your production process. An? equipment-leasing company has offered to lease the equipment to you for $ 9 500 per year if you sign a guaranteed 5?-year lease? (the lease is paid at the end of each? year). The company would also maintain the equipment for you as part of the lease.? Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below? (the equipment has...
You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $9,500 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease. Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below (the equipment has an economic...
You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $10,100 per year if you sign a guaranteed 5 year lease? (the lease is paid at the end of each? year). The company would also maintain the equipment for you as part of the lease.?Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below? (the equipment has an economic...
You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $10,000 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease. Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below (the equipment has an economic...
You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $9,900 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease. Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below (the equipment has an economic...
You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $ 10 comma 300 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease. Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below (the equipment...
You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $ 10 comma 500$10,500 per year if you sign a guaranteed 55-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease.Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below (the equipment has...
P 8-31 (similar to) Question Help You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $10,000 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease. Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed...
You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $10.000 per year if you sign a quaranteed 5-year as the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease Alternatively, you could buy and maintain the equipment yourself The cash flows from doing so are listed below the equipment has an economics...
You need a particular piece of equipment for your production process. An equipment-oasing company has pffered to lease the equipment to you for $10.500 per year you sign a guaranteed 5-year lease the lease is paid at the end of each year. The company would also intain the equipment for you as part of the lease Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below the equipment has an economic life...