Take note: due to rotating $10 was added to value of primary reduction in year 5.
A primary reason that the acted rate (4%) is lower than the interest rate RCGC would have to spend to get the fifth there’s 89, 600 quantity could be which the leasing business has a better credit risk rating than RCGC and will borrow in a lower interest. Another reason could be that the procurment company will get the buggies back towards the end of the rent and could lease them to another type of company. One more could be that the lessor will benefit from the downgrading tax defend on the buggies, which might balance the lessor's differential fascination revenue.
You will discover two situations to answer this question: initially scenario RCGB purchases the carts using its own funds and we determine the NPV @ 8%/ year, plus the second scenario is that RCGB purchases the carts employing borrowed money @ 8%, payable in 5 years (amortization plan shown showcased 1). Initial scenario: RCGB uses personal funds to purchase the carts. In this case, simply by comparing the NPV with the Purchase choice versus the Lease options made simple (see computations below), we can see that the NPV (@ 8%) of the Lease options made simple is larger by $9, 826 than the NPV in the Purchase option. Even the tax shield from depreciation and the proceeds from the disposal of the carts at the conclusion of your five years would not help make the Purchase choice NPV end up being higher than the Lease option NPV. The conclusion is that RCGB should lease the carts via B.
Second scenario: RCGC borrows the cash @ 8% interest rate. See below timetable please. Obtain option NPV is still below the NPV of the Lease option by $3, 409. The final outcome is that RCGB should rent the carts from N.
Delta NPV after duty is $4, 000
This means that Annual Repayment x several. 993 sama dengan $4, 000 (factor 3. 993 employed for 5 years, 8%) Annual Payment after tax sama dengan 4, 500 / several. 993 = 1, 001. 75 (for 40 carts) Annual Repayment per trolley after duty = 1, 001. seventy five / forty = twenty-five. 04...