SOC 202 Lecture : Leasing problems 22.2-22.7.doc

59 views3 pages
12 Mar 2014
Department
Course
Professor

Document Summary

Fin401 solutions to questions 2-7 in chapter 22 (editions 5 and 6) Note: assume that all cash flows other than initial cost occur at the end of a period, unless otherwise stated. Information: initial cost (ic) = . 5m, before tax lease payment (btlp) = k, number of years = n=4, before tax discount rate = . 075, tax rate = . 37, after tax lease payment (atlpa) = (800*(1-. 37)) = k, after tax discount rate (atdr) = (. 075*(1-. 37)) = . 04725, cca rate = . The pv(atlp) is based on n=4, pmt=,000, and r=. 04725, pv(atlp) = 1,798,635. Nal = . 5m -,798,635 - ,108 = -,743. So, given a pv(atlp)=,718,892, r=. 04725, and n= 4, the pmt will be ,655. The pv(atlp) is based on n=4, pmt= btlp*(1-t) = k*(1-0) = k, and r= btdr(1-t) = . In question 4, we determined that the lessor would be indifferent if it received ,532 per year, but no less.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents