Lease alternative: If the Superjet 25 is leased, then the company would have to make an...
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Lease alternative: If the Superjet 25 is leased, then the company would have to make an immediate deposit of R150 000 to cover any damage during use. The lease would run for five years, at the end of which time the deposit would be refunded. The lease would require and annual rental payment of R600 000 at the end of each year. As part of the lease cost, the manufacturer would provide all servicing and repairs. At the end of the five-year period, the plane would revert to the manufacturer, as owner. Required: 4.1 4.2 Calculate the total after-tax cost of the present values of the cash flows associated with each alternative. Which financial alternative would you recommend that the company should accept? Why? Lease alternative: If the Superjet 25 is leased, then the company would have to make an immediate deposit of R150 000 to cover any damage during use. The lease would run for five years, at the end of which time the deposit would be refunded. The lease would require and annual rental payment of R600 000 at the end of each year. As part of the lease cost, the manufacturer would provide all servicing and repairs. At the end of the five-year period, the plane would revert to the manufacturer, as owner. Required: 4.1 4.2 Calculate the total after-tax cost of the present values of the cash flows associated with each alternative. Which financial alternative would you recommend that the company should accept? Why?
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41 To calculate the total aftertax cost of the present values of the cash flows associated with each alternative we need to consider the following fac... View the full answer
Related Book For
Accounting Principles
ISBN: 978-0470533475
9th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Posted Date:
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