Cost of owning and cost of leasing tables are reproduced below. Using the appropriate table from the Chapter 12 Appendix, record the present value factor at 10% for each year and compute the present value cost of owning and the present value of leasing. Which alternative is more desirable at this interest rate? Do you think your answer would change if the interest rate were six percent instead of ten percent?Cost of Owning Anywhere Clinic - Comparative Present ValueFor-Profit Cost of Owning: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Net Cash Flow (48,750) Present value factor Present value answers = 2,500 2,500 2,500 2,500 5,000 Present value cost of owning = Cost of Leasing - Anywhere Clinic - Comparative Present ValueFor- Profit Cost of Leasing: Year 1 Year 1 Year 2 Year 3 Year 4 Year 5 Net Cash Flow (8.250) (8.250) (8.250) (8.250) Present value factor -- - (8,250) --- Present value answers = Present value cost of leasing =
Cost of owning and cost of leasing tables are reproduced below. Using the appropriate table from the Chapter 12 Appendix, record the present value factor at 10% for each year and compute the present value cost of owning and the present value of leasing. Which alternative is more desirable at this interest rate? Do you think your answer would change if the interest rate were six percent instead of ten percent?Cost of Owning Anywhere Clinic - Comparative Present ValueFor-Profit Cost of Owning: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Net Cash Flow (48,750) Present value factor Present value answers = 2,500 2,500 2,500 2,500 5,000 Present value cost of owning = Cost of Leasing - Anywhere Clinic - Comparative Present ValueFor- Profit Cost of Leasing: Year 1 Year 1 Year 2 Year 3 Year 4 Year 5 Net Cash Flow (8.250) (8.250) (8.250) (8.250) Present value factor -- - (8,250) --- Present value answers = Present value cost of leasing =
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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Transcribed Image Text:Cost of owning and cost of leasing tables are reproduced below. Using the appropriate table from the
Chapter 12 Appendix, record the present value factor at 10% for each year and compute the present value
cost of owning and the present value of leasing. Which alternative is more desirable at this interest rate?
Do you think your answer would change if the interest rate were six percent instead of ten percent?Cost
of Owning Anywhere Clinic - Comparative Present ValueFor-Profit Cost of Owning: Year 0 Year 1 Year
2 Year 3 Year 4 Year 5
Net Cash Flow (48,750)
Present value factor
Present value answers =
2,500 2,500
2,500
2,500
5,000
Present value cost of owning = Cost of Leasing - Anywhere Clinic - Comparative Present ValueFor-
Profit Cost of Leasing: Year 1 Year 1 Year 2 Year 3 Year 4 Year 5
Net Cash Flow (8.250) (8.250) (8.250) (8.250)
Present value factor -- -
(8,250)
---
Present value answers =
Present value cost of leasing
=
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