Look again at the National Waferonics lease in Problem 11. Suppose that National Waferonics is highly levered
Question:
Look again at the National Waferonics lease in Problem 11. Suppose that National Waferonics is highly levered and is unable to deduct further interest payments for tax.
a. Does this make a lease more or less attractive?
b. Recalculate the NPV of the lease by constructing an equivalent loan. Start with the final year. The final repayment of the loan with interest should be set equal to the cash flow on the lease.
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Related Book For
Principles of Corporate Finance
ISBN: 978-1260013900
13th edition
Authors: Richard Brealey, Stewart Myers, Franklin Allen
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