Q6/ A project engineering is assigned to start up a new project in a city where a 5-year contract has been finalized the project. Two lease options are available each with a first cost, annual cost, overhaul cost, and deposit -return estimates shown in below. Determine which lease option. should be selected on the basis of a present worth comparison, if the MARRás 20% per year. Location A Location B First cost,S - 400,000 Annual lease cost per year,S - 90,000 Overhaul cost in year 3 Overhaul cost in year 4 Deposit return,$ Lease term, years -70,000 60,000 25 - 320,000 - 110,000 -120,000 100,000 10

Q6/ A project engineering is assigned to start up a new project in a city where a 5-year contract has been finalized the project. Two lease options are available each with a first cost, annual cost, overhaul cost, and deposit -return estimates shown in below. Determine which lease option. should be selected on the basis of a present worth comparison, if the MARRás 20% per year. Location A Location B First cost,S - 400,000 Annual lease cost per year,S - 90,000 Overhaul cost in year 3 Overhaul cost in year 4 Deposit return,$ Lease term, years -70,000 60,000 25 - 320,000 - 110,000 -120,000 100,000 10

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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