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Lease Vs Purchase Case Study

1180 Words5 Pages

Chapter 17, pages 715-720.
Problem P17-4. Lease versus purchase
After-taxes cash outflow = Lease Payment - Tax Benefit
Firm A from year 1 to 4
Tax Benefit = $100000 x 0.40 = $40000
After-taxes cash outflow = $100000 - $40000 = $60000
Firm B from year 1 to 14
Tax Benefit = $80000 x 0.4 = $32000
After-taxes cash outflow = $80000 - $32000 = $48000
Firm C from year 1 to 8
Tax Benefit = $150000 x 0.40 = $60000
After-taxes cash outflow = $150000 - $60000 = $90000
Firm D from year 1 to 25
Tax Benefit = $60000 x 0.40 = $24000
After-taxes …show more content…

I think it will be a good justification to base on the goal of maximizing shareholder wealth.
Problem P18-4. Asset Acquisition Decision
(a) Effective cost of press: = $60000 + $90000 − $65000 =

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