Z Ltd. can acquire a machine by taking 15% loan or on lease basis from leasing company.
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Question:
Z Ltd. can acquire a machine by taking 15% loan or on lease basis from leasing company. Cost of machine is $ 1,26,965. Tax rate is 40%. The leasing company desires a return of 10% on the gross value of the asset. The present value of cash flow under buying option is $ 87,528. What should be the annual lease rental to be charged by the leasing company to match the loan option?
(A) $ 37,900
(B) $ 37,805
(C) $ 37,424
(D) $ 37,501
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: