You work for UTAR that is contemplating leasing printers. Printers’ costs RM 650,000 and would be depreciated straight-line to zero over a decade. You can lease it for RM 100,000 per year for a decade.   (a) Assume that the tax rate is 20 percent. You can borrow at 10 percent. Adopt the lease-buy analysis to recommend the best option to UTAR. (b) Malaysia’s government provide a 5% tax reduction during this Covid-19 pandemic. According to the new tax rate, should UTAR remain the option selected in (a)?

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
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You work for UTAR that is contemplating leasing printers. Printers’ costs RM
650,000 and would be depreciated straight-line to zero over a decade. You can
lease it for RM 100,000 per year for a decade.

 

(a) Assume that the tax rate is 20 percent. You can borrow at 10 percent. Adopt the lease-buy analysis to recommend the best option to UTAR.


(b) Malaysia’s government provide a 5% tax reduction during this Covid-19
pandemic. According to the new tax rate, should UTAR remain the option
selected in (a)?

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