Q. XYZ Builders need to acquire the use of a crane for construction business, and are considering buying or leasing a crane. The crane costs Rs. 1,000,000, and is subject to the straight-line method of depreciation to a zero salvage value at the end of 5 years. In contrast, the lease rent is Rs 220,000 per year to be paid at the end each year for 5 years. XYZ Builders can raise debt at 14% payable in equal annual instalments, each instalment due at the end of the year. The company is in the 50% tax bracket. Should it lease or buy the crane? kindly solve this
Q. XYZ Builders need to acquire the use of a crane for construction business, and are considering buying or leasing a crane. The crane costs Rs. 1,000,000, and is subject to the straight-line method of depreciation to a zero salvage value at the end of 5 years. In contrast, the lease rent is Rs 220,000 per year to be paid at the end each year for 5 years. XYZ Builders can raise debt at 14% payable in equal annual instalments, each instalment due at the end of the year. The company is in the 50% tax bracket. Should it lease or buy the crane? kindly solve this
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 3P
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Q. XYZ Builders need to acquire the use of a crane for construction business, and are
considering buying or leasing a crane. The crane costs Rs. 1,000,000, and is subject to the
straight-line method of
the lease rent is Rs 220,000 per year to be paid at the end each year for 5 years. XYZ Builders
can raise debt at 14% payable in equal annual instalments, each instalment due at the end
of the year. The company is in the 50% tax bracket. Should it lease or buy the crane?
kindly solve this
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