ampus Copy is contemplating leasing a high-technology scanner. he scanner costs R800 000 and if purchased it will be depreciated traight-line to zero over four years. Because of radiation ontamination it will be completely value-less in four years. ampus Copy can lease the scanner for R250 000 per year for four ears from Secure Scan. ssume lease payments are made at the end of year and Campus opy is in the 30% tax bracket: What are Campus Copy's expected cash flows for leasing the scanner if the interest rate is 10%? Should Campus Copy lease the scanner? Reuisie
ampus Copy is contemplating leasing a high-technology scanner. he scanner costs R800 000 and if purchased it will be depreciated traight-line to zero over four years. Because of radiation ontamination it will be completely value-less in four years. ampus Copy can lease the scanner for R250 000 per year for four ears from Secure Scan. ssume lease payments are made at the end of year and Campus opy is in the 30% tax bracket: What are Campus Copy's expected cash flows for leasing the scanner if the interest rate is 10%? Should Campus Copy lease the scanner? Reuisie
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Answer only 5.4
Transcribed Image Text:5.4 Revision Exercise 4
Campus Copy is contemplating leasing a high-technology scanner.
The scanner costs R800 000 and if purchased it will be depreciated
straight-line to zero over four years. Because of radiation
contamination it will be completely value-less in four years.
Campus Copy can lease the scanner for R250 000 per year for four
years from Secure Scan.
Assume lease payments are made at the end of year and Campus
Copy is in the 30% tax bracket:
What are Campus Copy's expected cash flows for leasing
the scanner if the interest rate is 10%?
Should Campus Copy lease the scanner?
5.5 Revision Exercise 5
Okay Oil is deciding whether to lease or buy drilling equipment for
oil exploration. The equipment costs R6 million and will be
depreciated using the straight -line method over five years to a zero
value. Okay Oil's tax rate is 28% and is able to borrow funds at 9%
interest. Digger Drills has offered to lease the equipment to Okay
Oil for R1 400 000 per year.
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